HELOC Lenders Trampling Regulation Z

Real Estate Agent with GES Real Estate LLC

Numerous consumer complaints regarding freezing or reducing the available credit on HELOC's or home equity lines of credit have gotten the attention of the Treasury Department, the FDIC and the OTS or Office of Thrift Supervision, a branch of the Treasury Department.

As home values in many areas continue to decline complaints continue to grow that some thrifts are freezing the credit promised to borrowers and that they may be altering accounts that were not supposed to be changed.
After receiving what OTS describes as an "uptick in complaints" regarding Savings and Loans reducing or freezing HELOC's, the OTC issued a six page letter to the institutions known as thrifts which spells out their obligations to HELOCs.

The letter of guidance may serve more as a warning to thrifts that they can freeze promised credit only under approved circumstances and not for broad geographic areas that may be harder hit by the housing slump than others. Each loan must be looked at individually in order to determine a "significant decline" in value. Regulation Z has interpreted and considers "significant decline" to be at least a 50% drop in the homes equity from the time the HELOC was issued.

i.e. Assume that a house had a first mortgage of $50,000 and appraised for $100,000. A $30,000 HELOC is opened leaving the available equity at $20,000. The creditor could reduce the available credit if the home value declined to $90,000 or 50% of the equity at the time the HELOC was taken.

The letter of guidance to thrifts goes on to outline legal risks to thrifts violating Regulation Z by stating:
"Regulation Z, which implements the Truth In Lending Act (TILA) sets forth the circumstances under which a HELOC may be terminated, suspended or reduced. Savings associations are responsible under Regulation Z for timely reinstatement of lines of credit that cease to meet the criteria for suspension or reduction." .............
"With limited exceptions, Regulation Z prohibits lenders from terminating a HELOC and accelerating repayment"
Exceptions include fraud, failure to meet repayment terms and actions adversely affecting the property.

For a copy of the six page letter go to GES Realty.

The FDIC has a hot line for concerned consumers 877-ASK-FDIC
The OTC also has hotline available at 800-842-6929


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
home value
home equity line of credit
regulation z
truth in lending act
ges realty

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Donald Kelly

I was looking for one thing and came across your blog. It is well written in good English.

However, there are so many things that are excluded and should be included having to do with the economy when Bush took offie, Paulson and his history at Goldman Sachs and how he got to join Bush with over 700-million dollars reduced in recent months to about 500-million dollars or he alleges. Let me add short sentences, in part, as follows:

1. Banks don't care about anything but themselves. A knowledge of each big bank will bare that out. My Second Lender Indy Mack Bank was acquired by a person who was a builder and didn't want to wait when he wanted money. He had all that he needed once he bought the bank from now infamous Countrywide. The ending we all know! Fill in the lines and have fun!

2. HOPE was formed and in a Congresssional review it was jusged that they didn't do anyhint anf the way they operated would minimize any attempt at doing anything for foreclosure "Taxpayers." That report is public and it has to be known that they funneled their workload out to about a dozen others like "Acorn" of voter fraud on behalf of the democrats. Actually they did this four years ago so I am not impressed at their fraud. So all the othre under HOP are paid by the government, etc., and they do nothing. What they do can't get anywhere in that they don't go to your Lenders directly but, do what you can do for yourself and send it to the Lender for them to contact the Lendee. Why don't they say this up-front? At least Bush has a way out by saying that the government has the interest of the Taxpayers at heart. Paulson is even worse than Bush in that it appears on the surface that Paulson should know more than Bush.

3. Paulson recently appointed a Neal to handle the 700-million dollars and an employee of his at Goldman Sachs (os Sacks). I read Neal's resume and he never did anything other than be employed at a company that with Paulson was under (not going under a big difference). Neal had one reference from a guy at Boeing who said that he had "contributed" to something while at Boeing along with many others. Great for a resume? When questioned by Congress Neal said that his big thing was forming "HOPE" (yes the same HOPE, supra) to help borrowers in or going into foreclosure. I hope that he doesn't put this on his resume (emphasis added). That's it fot Neal folks!

4. Paulson in my opinion piecked him because he is close to Paulson and Paulson couldn't find anybody who could be hushed about the governemnt and the economy. Keep in the back of your mind that when Bush by cheating beat Gore the economy at that time was not doing so great. Being a former Intelligence, pilot, navigator, etc., with NATO while in Germany I believe that the 911 thing Bush etc., et al knew about but, didn't know the magnitued of what was taking place. I believe that the same is for Pearl Harbor in that the USA needed to get into "War" but, needed something to "jump start" the engine of "Taxpayers" but it wasn't know to what extent it could be. For years we would tell the world that we were not crossing the Yalu River into China over North Korea but, this was also an ongoing lie by that administration. I could go on endlessly about Bush and Paulson re China and that most things that they came back with were BIG lies about how those meetings went. The Chinese they visited laughed inside (olite culture) about not only the meetings but, what Paulson and Bush represented to the "Taxpayers." I could go on and on and on but, got other things to do and didn't expect to run into this blog while searc hing for something else.

5. I will give you a clue that we "Taxpayers" haven't seen it yet in that what is happening will take place for years and we will probably go from a recession into a depression like in 1929. For example we are borrowing from China more than a trillion dollars. The "Taxpayers" for generations will be paying of this plus another eleven trillion dollars.  Total now between Elven and thirteen trillion dollars. Do you know what the interest alone is on thid debt? My next premise is that you "haven't seen it yet." Before getting into this part Paulson and Bush know that China does not nor have they ever had the money to loan the USA as they have. Bush like other Presidents could care less othe than the fact of "looking good." Lies make us all feel good at time. Some lie about everything like Bush and Paulson. (By the way since truth is a defense you can send my piece to anybody that you would like).

6. Now, for the first time ever you will all learn something which is a way of life if it impacts you or another "Taxpayer." As any good lawyer will tell you a very important word in law and life is "causation." Everybody stop for a moment in time and think of the foreclosure problems that we are now in and will be in for many years to come. Who started it? Forget the Bush guy who changes people at will and for no reason other than to cover his "traps," and "tricks," and "dishonesty," etc., and the only President who ran out so many employees that he had initially selected. The Bush guy was hiding his booths like he admits doing as to the invasion of Iraq. I don't believe that any of you ever remember this, in part, as follows. After the Iraq invasion the United Nations wanted to take over and put in UN military people. Bush for years said no and the reson that he did was that he wanted to like everything else be I think "like his father," although his father was only marginal as a president and didn't have much more support from the "Taxpayers" as does George who most people of consequence (no pun intended) say that "he is the worst president ever." That's a long time.

Causation, goes back to the builders. Yes, builders. They controlled the billions of dollars in doing the things that they did do which was to build a house or a community or region or city, or even larger. The builders like D R Horton ("America's Builder") lies about everything that they did and did it with impunity and arrogance which is the reason why they ran ads saying "first time home buyers." This meant that they liked virgin buyers who knew nothing and knew nothing about what to expect. The Banks went along with them because of they didn't there were other banks that any builder could take their business to. Yes, they were in colusion with each other all the way up the ladder to Wall Street, and then those equity packages sent off to many different countries of the world knowing that what they all were doing was fraud (intentionally and knowing otherwise, etc.) and thosein the foreign countries loving it because of the sin of "greed." Like the USA ENRON and all the others like World Vision, and the others we all know about. For those of you who by religion believe this than all those greedy people and those living off of that greed will perish in HELL. Leave me out of this one!

Got to go and I would like to say, again, that your blog is really good and well written. Written much better than the codes and laws from Congress who deliberately refrain from good writing leaving out nothing in that they generally do nothing but attempt to collect 50-million dollars to build a "bridge to nowhere."

In ending I went to a military college. So did McLain. In school we never lied, cheated, stold, etc., until we graduated to fit in with those others doing it to us (survival). McCain is
a-typical" in his lying while campaining  and I don't want to hear about how honest, etc., people who attend Annapolis are. Or, could it be only McC ain who graduated second from the bottom of his graduating class?




Hey, no "check-speller?" I don't want to go over this, again, to long!


Oct 23, 2008 03:59 PM #1
frozen HELOC complaints

If your HELOC or home equity line of credit  was frozen, suspended or reduced by your mortgage lender or bank, you can share your home equity line of credit or HELOC complaints with other HELOC borrowers whose HELOCs were frozen:


You could also try contacting class action attorneys investigating HELOC freezes:


Mar 24, 2009 01:06 PM #2
G. Oliver

I just received notification that Chase has suspended my HELOC effective last week.  They are basing it not on my payment history but on the decline of my property since the HELOC was opened last October 23. This is BS.  They said my home was worth only $716,000 using standard valuation methods, but no traditional appraisal was conducted.  My morgage is only $362,000, and I used only $15,000 of my $139,000 HELOC for home remodel.   After the project was completed, the County Assessor's Office came by and assessed me an additional tax because of the property improvement.  Even if the house was only worth $716,000 which I belive it is around $785,000 currently (I live less than 1/4 mile from the beach), I still have over $400,000 in equity.  If I want to appeal the suspension, then I have to pay for a CHASE appraiser to come out and value my property again. Now, I can't get another line of credit elsewhere becasue my current HELOC has been suspended, and nobody wants to be in a 3rd lien position.  I can't pay the HELOCf under 2 years or else I will be subject to another fee.  Really?  Didn't Chase get a bailout from the gov't?  Now they are bailing out on their customers.  Each account should be considered individually and not by virtue of their zip code.  So now, if I have an emergency, I am out of luck.  I cannot continue my home improvements.  I will not be stimulating the economy by spending my money on consumer products and services.  What can I do?  G. Oliver

Aug 27, 2009 04:24 AM #3
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


George Sinacori

Ask me a question
Spam prevention