[Mark]

Had a question re: this specific FIL and whether it pertains to ALL HELOCs maturing or just those where borrowers are “experiencing financial difficulties”. Our current specs in our loan platform call for only generating a maturity notice 30 days prior to maturity. We’ve just learned that letters are being manually generated and sent to each HELOC customer three and seven months prior. My gut tells me that this is only for troubled borrowers. Please advise.

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[rcooper]

Here’s a blog article we did on this guidance back in 2014: https://mycomplianceresource.com/interagency-guidance-on-helocs-nearing-their-end-of-draw-periods/.

We state in the article: “Most creditors renew or refinance the HELOC as the draw period comes to an end. Normally this is a smooth process, but in some cases borrowers may have difficulty meeting higher payments resulting from principal amortization or interest rate reset, or renewing existing loans due to changes in their financial circumstances or declines in property values. These are the situations addressed by the interagency guidance.”

I think approach you want to take is to consider the entire guidance as a risk management guidance. It is designed to address situations where the borrower might experience difficultes, but there may be certain aspects you’ll want to apply to all HELOCs and some that will apply to those that may have trouble. I dont’ believe the guidance gives specific timing of a maturity notice – if I missed it please let me know.

I hope this helps. Please let us know if you have other questions.

[Author]

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