NCUA Okay's Interest-OnlyHELOCs
ALEXANDRIA, Va. - (03/02/05) -- NCUA approved a proposal Tuesday fora federal credit union to offer its members an interest-only homeequity line of credit. In a new legal opinion letter, the federalregulator said it is permissible for an FCU to make a home equityline of credit with a 10-year draw period, and only requireinterest payments. At the end of the 10-year period, the line ofcredit will close and the member will be required to pay theoutstanding principal and interest over a five-year period. Theproduct will allow the member to pay down the principal on the lineof credit during the 10-year draw.