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I have a question about collecting information for monitoring purposes under Regulation B for a HELOC secured by the customer's principal residence. A majority of the HELOC is going to refinance an existing HELOC. Does the bank need to collect information for monitoring purposes for this loan?

I have a question about collecting information for monitoring purposes under Regulation B for a home equity line of credit (HELOC) secured by the customer's principal residence. The customer has applied for a new $200,000 HELOC. He will be using $150,000 to pay off the balance of the existing HELOC with our bank and will use the remainder of the funds ($50,000) for home improvement. The original HELOC was used for purchasing our borrower’s principal dwelling. Because a majority of the HELOC is going to refinance an existing HELOC secured by the primary residence, I am questioning whether the bank needs to collect information for monitoring purposes for this loan.

If the primary purpose was to refinance the HELOC, then it appears that the bank would collect information for monitoring purposes. If the original HELOC was extended by your institution and it already collected such information on the first one, it appears that the bank may but is not required to collect it again.

Comment 5 to §1002.13(a) provides:

Transactions not covered. The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements. An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling.

Comment 5 to §1002.13(a) provides:

Refinancings. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction.

(July 2017)

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