Question: Can a bank provide an access device for a home equity line of credit (HELOC)?
Answer: This is permissible, with several risk considerations for the bank. Under Regulation Z, § 1026.2(a)(15)(ii), a debit card that can access a HELOC is a credit card. Additionally, § 1026.12(d)(1), further prohibits the bank from exercising the right of set-off for credit card balances. Therefore, whereas a HELOC without a credit card generally provides a right of setoff, subject to certain requirements, the bank loses this right when providing a debit card to access a HELOC.
Regulation Z, § 1026.2(a)(15) – https://www.consumerfinance.gov/rules-policy/regulations/1026/2/#a-15-ii
Regulation Z, § 1026.12(d) – https://www.consumerfinance.gov/rules-policy/regulations/1026/12/#d
Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933 or email info@compliancealliance.comand ask for our Membership Team.
Not a member? Learn more about membership with Compliance Alliance by attending one of our live demos:
