15 USC 1647 - Home equity plans

U.S Code last checked for updates: May 18, 2024

§ 1647.

Home equity plans

(a)

Index requirement

(b)

Grounds for acceleration of outstanding balance

A creditor may not unilaterally terminate any account under an open end consumer credit plan under which extensions of credit are secured by a consumer’s principal dwelling and require the immediate repayment of any outstanding balance at such time, except in the case of—

(1)

fraud or material misrepresentation on the part of the consumer in connection with the account;

(2)

failure by the consumer to meet the repayment terms of the agreement for any outstanding balance; or

(3)

any other action or failure to act by the consumer which adversely affects the creditor’s security for the account or any right of the creditor in such security.

This subsection does not apply to reverse mortgage transactions.

(c)

Change in terms

(1)

In general

(2)

Certain changes not precluded

Notwithstanding the provisions of subsection 1

 So in original. Probably should be “paragraph”.

(1), a creditor may make any of the following changes:

(A)

Change the index and margin applicable to extensions of credit under such plan if the index used by the creditor is no longer available and the substitute index and margin would result in a substantially similar interest rate.

(B)

Prohibit additional extensions of credit or reduce the credit limit applicable to an account under the plan during any period in which the value of the consumer’s principal dwelling which secures any outstanding balance is significantly less than the original appraisal value of the dwelling.

(C)

Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which the creditor has reason to believe that the consumer will be unable to comply with the repayment requirements of the account due to a material change in the consumer’s financial circumstances.

(D)

Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which the consumer is in default with respect to any material obligation of the consumer under the agreement.

(E)

Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which—

(i)

the creditor is precluded by government action from imposing the annual percentage rate provided for in the account agreement; or

(ii)

any government action is in effect which adversely affects the priority of the creditor’s security interest in the account to the extent that the value of the creditor’s secured interest in the property is less than 120 percent of the amount of the credit limit applicable to the account.

(F)

Any change that will benefit the consumer.

(3)

Material obligations

(4)

Consumer benefit

(A)

In general

(B)

Bureau categorization

(d)

Terms changed after application

(e)

Additional requirements relating to refunds and imposition of nonrefundable fees

(1)

In general

(2)

Constructive receipt

(Pub. L. 90–321, title I, § 137, as added Pub. L. 100–709, § 3, Nov. 23, 1988, 102 Stat. 4731; amended Pub. L. 103–325, title I, § 154(c), Sept. 23, 1994, 108 Stat. 2197; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)

cite as: 15 USC 1647