I've seen some conflicting schools of thought on this issue. It appears that HELOCS are federally-related mortgages and therefore covered with RESPA. However, in 1024.7(a) the lender is to provide a GFE unless provided in 1024.7(h) which mentions that for HELOCS, instead of the GFE, the early disclosure requirements of 1026.40 apply and would satisfy 1024.7(a). So the GFE as well as all of the other requirements of 1024.7(a) are replaced by 1026.40 it would appear.
By ALL OTHER REQUIREMENTS OF 1024.7(a) I mean:
The rest of 1024.7(a) goes on to say(2) the lender must provide the GFE to the loan applicant by hand delivery, by placing it in the mail, or, if the applicant agrees by fax, email, or other electronic means (which is required in 1026.40(b) Time of disclosures ) (3) The lender is not required to provide the applicant with a GFE if, before the end of the 3-business day period: (i) the lender denies the application; or (ii) the applicant withdraws the application (which is required and discussed in 1026.40 (b)(5)) (4) the lender is not permitted to charge, as the condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service (credit report excluded) until after the GFE AND indicated intention to proceed with the loan covered by the GFE. etc etc (This is not mentioned in 1026.40).
So my question is: Is the intent to proceed requirement in 1024.7(a)(4) negated by lack of mention in 1026.40 and therefor not required for HELOCs?
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An intent to proceed on a HELOC is not required. The early HELOC disclosure is required to be delivered with the application and not three days after receiving the application (except in limited circumstances).
Also, if a disclosed term changes (other than a change due to fluctuations in the index in a variable-rate plan) prior to opening the plan and the consumer therefore elects not to open the plan, the consumer may receive a refund of all fees paid in connection with the application.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
Understood that the Intent to Proceed is not required on HELOCs. However, is it required on fixed HELOANS? What if the institution does not charge any fees for HELOANS until closing? If the customer agrees with the terms at closing and signs the documents, is that their intent to proceed? There has been some debate on this topic since the regulation highlights "Certain mortgage and variable-rate transactions" as opposed to including Home Equity Loans as well throughout the Intend to Proceed fee section in 1026.19(e)(2)(i)(A)(B)
any feedback would be greatly appreciated! thanks
Are these fixed loans a part of the HELOC (i.e., available balance on the HELOC increases as these fixed loans are paid down) or are they separate loans?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
