dcsimg
We research, you save.
Got Questions On Rates? (855) 610-2972

Why didn’t my bank notify me of my reduced HELOC?

By   |  Posted in Ask The Expert

Q: Do banks by law have to give you notice of reductions in a Home Equity Line of Credit?

A: If you mean "advance notification," the answer would be "no," at least in most circumstances. The reduction or termination of a home equity line of credit would not require advance notice if you have signed an agreement permitting the lender to do so when the value of your home has significantly declined below the appraised value, or where a material change in your financial situation has occurred.

That said, the regulation which governs such things suggests that they do need to notify you within 30 days of having taken any "adverse" action on your account.

Somewhere in the paperwork you signed to get your home equity line of credit there is usually a clause which allows the mortgage lender to make a change to your credit line (even terminating it all together) if there is a material change in the property's valuation or even your credit profile. Presumably, you signed or initialed this clause as a part of your agreement.

Some more technical details can be found at http://files.ots.treas.gov/481121.pdf; it is technically a guide for lenders with regard to account management, but does cover your reductions and terminations of lines of credit and the conditions under which these events can occur.

More help from HSH.com

  • Advantages of FHA mortgages in 2016

    FHA loans have become more affordable in 2015, thanks to a drop in the annual mortgage insurance premium that the Federal Housing Administration charges.
  • 10 metros where a home costs about $1,000/month

    HSH.com identifies 10 metro areas where you can afford the principal, interest, taxes and insurance payments on a median-priced home for only around $1,000 per month.
  • HSH.com on the latest move by the Federal Reserve

    The Federal Reserve concluded a meeting today with no change to the federal funds rate and no changes to other monetary policy tools.
  • Mortgage Rates Radar 09/13/2016: Despite Fed concern, mortgage rates holding steady

    HSH.com releases its latest Weekly Mortgage Rates Radar showing a slight increase in popular mortgage rates during the seven-day period ending September 13, as concerns that the Federal Reserve may make a move at next week's meeting have to buffeted the financial markets of late.  The Weekly Mortgage Rates Radar reports the average rates and points offered by lenders for the two most popular types of mortgages, the conforming 30-year fixed-rate mortgage and the conforming 5/1 adjustable-rate mortgage (ARM).
  • Mortgage Rates Radar 09/06/2016: Modest jobs report leaves rates flat

    HSH.com releases its latest Weekly Mortgage Rates Radar showing almost no change again in popular mortgage rates during the seven-day period ending September 6, as a fair employment report for August failed to provide conclusive evidence that a move by the Federal Reserve is forthcoming. The Weekly Mortgage Rates Radar reports the average rates and points offered by lenders for the two most popular types of mortgages, the conforming 30-year fixed-rate mortgage and the conforming 5/1 adjustable-rate mortgage (ARM).