Texas CUs Can Modify HELOC Terms

January 07, 2002, 1:00 a.m. EST 1 Min Read

- AUSTIN, Texas (01/07/02) - A state chartered creditunion may alter the terms of a home equity loan by reducing itsinterest rate and changing the payment amounts or the number ofmonthly payments without refinancing the loan, the state's CUDepartment said in a legal opinion last week. The guidance wasissued with other state banking regulators in light of the ongoingrequirements of the Soldiers' and Sailors Civil Relief Act, whichmay necessitate a modification to home equity loans for militarypersonnel. A loan modification, according to the letter, is atransaction in which an existing note is modified, but the note isnot cancelled, allowing the credit union and member to extend theterms of the loan by mutual agreement.

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