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Comp Blog

Q&A: Refund of Fees on HELOCs

By: Danielle Wright

CommentFriday - July 18, 2014

Q: At XYZ Federal Credit Union, members are generally responsible for paying all fees such as title report fees, appraisal fees, and credit report fees, etc.on HELOCs. Under what circumstances (pursuant to Regulation Z) would members not be responsible for paying such fees?

A: There are three situations in connection with a HELOC loan application where the member would not be responsible for paying any fees such as those related to a title search, property appraisal, or credit report. In the first situation, Regulation Z Section 1026.40(g) requires a credit union to refund all fees paid by a member in connection with a HELOC loan if any term required to be disclosed, changes (other than a change caused by variations in the index of a variable-rate plan) before the plan is opened and as a result the member decides not to open the plan. In the second situation, pursuant to Section 1026.40(h), a credit union may not impose a nonrefundable fee in connection with a HELOC loan application until three business days after the member receives the disclosures and brochure required by Section 1026.40. In other words, a member would not be responsible for paying any fees incurred by the credit union in connection with the member's HELOC loan application if the loan application is withdrawn by the member within three business days after the member receives the required disclosures and brochure. In the third situation, a credit union must refund all amounts including fees in connection with a HELOC loan application if the member rescinds the loan transaction within the required time period pursuant to Regulation Z Section 1026.15.


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