On August 26, the Office of Thrift Supervision (OTS) issued guidance to chief executive officers of federal savings associations with respect to home equity lines of credit (HELOCs).

As stated in the guidance, a federal savings association’s HELOC program “should employ fully articulated policies that address marketing, credit exposure, underwriting standards, collateral valuation management, and loss mitigation.” In addition, in discussing actions by federal savings associationsto manage credit risk from HELOCs (such as the reduction, suspension or termination of such a loan), the OTS stated that federal savings associations must follow federal laws and rules designed to protect HELOC customers, including those laws that protect consumers from discrimination based upon race, sex/gender, or other protected characteristics when making such credit decisions. Moreover, actions to modify HELOCs must not violate the Federal Trade Commission Act’s prohibition against unfair or deceptive practices or the OTS rule that prohibits inaccurate representations or advertising. Such rule prohibits statements that are technically accurate but misleading (such as statements that describe credit opportunities related to HELOCs but fail to mention that such loans may be modified or terminated).