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

  • Mortgage Rates Radar 07/26/2016: Mortgage rates tick higher again this week

    HSH.com releases its latest Weekly Mortgage Rates Radar showing a third small uptick in mortgage rates during the seven-day period ending July 26, as markets wait for data to further assess the repercussions of last month's "Brexit" vote. 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 07/19/2016: Mortgage rates firm slightly

    HSH.com releases its latest Weekly Mortgage Rates Radar revealing a slight increase in popular mortgage rates during the seven-day period ending July 19, as warmer economic data and more-stable financial markets have formed as the tumult of the Brexit vote falls away. 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).
  • I’m in the National Guard, am I eligible for VA benefits?

    Yes. National Guard and Reserve members may qualify for a VA home loan. According to VA.gov, National Guard and Reserve members must meet one of the following conditions...
  • Mortgage Rates Radar 07/12/2016: Fixed mortgage rates creep toward record lows

    HSH.com releases its latest Weekly Mortgage Rates Radar showing still-declining mortgage rates during the seven-day period ending July 12, as global investors continue to try to find safe and positive returns in uncertain markets. 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).
  • Can I use a VA mortgage to purchase investment properties?

    The answer is "probably not," or at least "not directly or immediately."