- This topic has 1 reply, 2 voices, and was last updated 11 years, 3 months ago by .
-
Topic
-
My financial institution offers both Home Equity Term loans and Home Equity Line of Credits. It is our understanding that a financial institution cannot steer a client into an open-end line of credit to avoid the ATR rules applicable to closed end credit set forth in Regulation Z. With that being said, I have seen other financial institutions offer a Home Equity Line of Credit product that has a fixed rate feature built in them. One of our area banks has totally removed Home Equity closed end term loans from its product line-up. the only non conventional mortgage option shown is a HELOC.
Example… If I were to open a line for $100,000 and use $30,000 of that line for home improvements, I can go to the bank and place the portion used in a fixed rate principal & interest payment or fixed rate interest only payment. As the balance on the fixed portion decreases my line availability increases.
The question is, is a line of credit with a fixed rate option considered avoiding ATR rules?
- You must be logged in to reply to this topic.