Reply To: HELOC unused commitment fee


There are several issues to consider.

For purposes of Truth in Lending such a fee would need to be disclosed. Including the fee in an account agreement/disclosure at consummation would be relatively straight forward. Adding the fee to an existing HELOC is more complicated. Most likely the fee could only be added with the customer’s consent.

State usury laws must also be considered. With the most favored lender status used in Kentucky there is a number of statutes under which a HELOC can be made. I am not aware of any Kentucky statute that describes a fee such as the one you describe. You would likely need a legal opinion to help you work around the usury issue.