Mortgages Analyzed
Mortgages Analyzed
Mortgages Analyzed
 
HELOC Brochure

What is HELOC Brochure?

HELOC Brochure

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).

Source :www.MortgagesAnalyzed.com

Borrower's Consideration

Use it as a General Guide

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.

Source :www.MortgagesAnalyzed.com

Lender's Consideration

For Which Loans Do You Need to Send the Brochure?

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).

Timing for Delivery – 3 Business Day Rule

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.

Brokered Loans

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.

Source :www.MortgagesAnalyzed.com

Evidencing the Delivery of Settlement Cost Brochure

An important question is how to evidence the delivery of the brochure? There are various ways in which you can accomplish that:

  1. Applicant's Acknowledgement of Receipt: You may as ask the borrower to send you an acknowledgement that he/she has received the brochure within three business days from receipt of loan application. Ideally, you should use one letter to acknowledge the delivery of all initial disclosures such as TIL, ARM disclosure, etc.
  2. System Log: If you are sending the brochure electronically then your system may log a memo or record of mailing. This would be an appropriate form of documentation.
  3. Checklist: You can prepare an internal checklist, for each file, where the loan processor or loan originator checks the list of documents sent at the time of application. This is a weaker form of evidence of delivery as compared to borrower’s acknowledgement.
  4. Copy of Brochure in Loan File: Some lenders keep a copy of the brochure, along with a date stamp, in the loan application as evidence of delivery of disclosure. This is not an ideal method and creates difficulties when imaging loan documents.

Again, for brokered loans, do not rely on the mortgage broker to send the disclosure on your behalf. You are responsible for ensuring compliance.

Record Retention

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.

Source :www.MortgagesAnalyzed.com
 

Document Summary

 
HELOC Brochure
Purpose
HELOC Brochure is an informational brochure that helps borrowers become familiar with the features of HELOC product.
Use in Mortgages
The brochure helps borrowers get a basic understanding of HELOCs so that they make informed decisions and avoid common pitfalls.
Other Names
  • What You Should Know About Home Equity Lines of Credit Brochure
  • HELOC Booklet
  • HELOC Brochure
Type
Disclosure
Provided By
Lender or Broker on behalf of the lender
Provided To
Borrower
Notarization Required
No
Signed By
None
Life Cycle Stage
Origination
Recordkeeping
We recommend the lender should be able to demonstrate the delivery of the Booklet for at least five years from date of settlement.
Model Form
Yes. Prescribed by Regulation X and developed by CFPB as HELOC Brochure.
Applicable Laws
CFPB Regulation X, 12 CFR 1024.6
Source :www.MortgagesAnalyzed.com
 

Updated: Oct 20, 2013

Comments

comments powered by Disqus
Helps borrowers to understand the features, costs, repayment options, and other aspects of a HELOC product
Finance
Know all there is to know about the US Mortgage Industry. We help you to make a well informed decision.
Finance
Loan Products
Confused about the choosing right loan product for you? We help you decide the loan product that suits your needs best.
Loan Products
Documents
Here you will find all there is to know about the forms, papers & documents required for Home Loan Mortgage and much more.
Documents
Regulation
List of all the Regulations related to US Mortgage Industry.
Regulations