Question:

What stipulates the Home Equity Loan Consumer Protection Act?

Answer:

The Home Equity Loan Consumer Protection Act applies to home equity lines of credit applications. If the terms and rates of your loan application changes - APR, loan structure, repayment schedule, rates, and fees - you have the right to walk away from the deal and they owe you a refund of all fees related to the home equity loan application.

Also, the Home Equity Loan Consumer Protection Act restricts lenders in changing your credit plan once it is opened.

The Home Equity Loan Consumer Protection Act of 1988 is a part of the Truth In Lending Act (TILA) and does not apply to purchase money loans.

Home Equity Loan Consumer Protection Act Disclosures

  • Description of rates applies.
  • Borrower has to be notified of the existing risk to lose their home.
  • Any item on the quote that may change before closing must be pointed out.
  • Loan structure and possible balloon payments have to be clearly specified.
  • The borrower needs to know they have rescission right - that is, could back off within three days after signing the loan papers.
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