HELOC Brochure is an informational brochure that helps borrowers become familiar with the features of HELOC product so that they make informed decisions and avoid common pitfalls. The brochure includes topics that help borrowers to understand the features, costs, repayment options, and other aspects of a HELOC product.
HELOC Stands for Home Equity Line of Credit. HELOC Brochure is also known as What You Should Know About Home Equity Lines of Credit.
The lender is required to provide the booklet as per §1024.6 Regulation X, which implements Real Estate Settlement Procedures Act (RESPA). Regulation X and provisions of RESPA are enforced by Consumer Finance Protection Bureau (CFPB).
The booklet is a general guide that gives an overview of HELOCs. However, the guide is a general purpose document and does not provide information to determine whether a HELOC is suitable for your particular needs. You should work with your loan originator to understand the loan terms, fees, disclosures, and important considerations.
You are required to provide the brochure for any application for a HELOC. Specifically, the regulation X requires the brochure to be sent for real estate secured open-ended credit plans as defined in Regulation Z, 12 CFR 1026.2(a)(20).
Regulation X requires you to deliver or place the brochure in the mail not later than three business days following receipt of the loan application. If you deny the loan application before the end of the three-business-day period, then you need not provide the booklet to the borrower. Business day means a day on which your offices are open to the public for carrying on substantially all of its business functions.
If the borrower is using a broker then the broker is required to send the brochure. In that case, you are not required to send the brochure and you can rely on the broker. However, you run the risk of non-compliance if the broker is not able to provide evidence of the delivery of the brochure. Therefore, we recommend sending the brochure yourself for all loans, irrespective of whether the broker is sending the brochure or not.
An important question is how to evidence the delivery of the brochure? There are various ways in which you can accomplish that:
Again, for brokered loans, do not rely on the mortgage broker to send the disclosure on your behalf. You are responsible for ensuring compliance.
We recommend maintaining the evidence of delivery of brochure in the loan file for a period of at least five years from the date of settlement. The document retention period will be consistent with other record-keeping requirements of Regulation X. For declined, cancelled, or withdrawn applications, the evidence of delivery should be maintained for as long as the loan application file is maintained, which would normally be at least 25 months from date of action taken to be consistent with Regulation B recordkeeping requirements.
Updated: Oct 20, 2013