HELOCS and RESPA
Posted by Sarah Loats
Do we have to provide the GFE for HELOCs? What about second mortgages?
No, the GFE is not required for HELOCs, so long as you are providing te HELOC-related disclosures required by Regulation Z.
The Good Faith Estimate rules are found in section 3500.7 of RESPA. Paragraph (h) notes:
(h) Open-end lines of credit (home-equity plans) under Truth in Lending Act. In the case of a federally related mortgage loan involving an open-end line of credit (home-equity plan) covered under the Truth in Lending Act and Regulation Z, a lender or mortgage broker that provides the borrower with the disclosures required by 12 CFR 226.5b of Regulation Z at the time the borrower applies for such loan shall be deemed to satisfy the requirements of this section.
There is not a similar exemption for closed-end second mortgages; thus, a GFE would be required for such loans.