Under what condition can a lender freeze or reduce a HELOC credit line?
Correct Answer
A) When the value of the property has declined significantly below the original appraised value
Under Regulation Z, lenders may freeze or reduce a HELOC credit line when the value of the dwelling securing the line has declined significantly below the original appraised value, among other specific circumstances outlined in the regulation.
Why This Is the Correct Answer
Under Regulation Z, lenders may freeze or reduce a HELOC credit line when the value of the dwelling securing the line has declined significantly below the original appraised value, among other specific circumstances outlined in the regulation.
More Mortgage Knowledge Questions
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A borrower has a $300,000 mortgage at 5% annual interest rate with a 30-year term. After making payments for 10 years, approximately how much of the original principal balance remains?
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A 7/1 ARM is in its 9th year. The current rate is 6.5%, the fully indexed rate is 4.8%, and the loan has 2/2/5 caps with a 4% floor. What is the lowest rate the borrower could pay at this adjustment?