Yesterday, the Office of Thrift Supervision (a part of the federal government) urged banks to follow the proper regulations when freezing home equity lines of credit.

They explain:

“Declining home prices in parts of the country are prompting some institutions to curtail, suspend, or terminate customers’ home equity line of credit.  Today’s guidance emphasizes that institutions taking such actions must comply with federal laws and rules designed to protect customers, including regulations implementing the Truth in Lending Act, Equal Credit Opportunity Act, Fair Housing Act and the OTS nondiscrimination rule.

“A home equity line of credit is an attractive product for many homeowners and lenders,” the guidance said.  “While sound underwriting and effective risk management systems are essential, associations must employ these strategies in a manner that complies with applicable consumer protection laws and regulations.”

This notice comes after a Congressional subcommittee sent surveys to major lenders to judge compliance with the law in May and the FDIC warned lenders about HELOC procedures in the early summer.

See Also:

Are Banks Allowed to Freeze Home Equity Lines of Credit?

FDIC Warns Lenders on Freezing HELOCs

Congressman Questions HELOC Freeze Lenders

Tags | Heloc, heloc freeze, home equity line of credit, mortgage crisis