We do not believe that the HELOC rules regarding the reduction or freezing of a credit line require you to disclose that a customer can request reinstatement of a credit line in connection with a written agreement to reduce or freeze the line. Regulation Z permits creditors to freeze or lower the credit limit for a HELOC, without meeting any other special requirements, if the customer agrees to the change in writing. 12 CFR 1026.40(f)(3)(iii)Comment 1, Official Staff Commentary, 1026.40(f)(3)(iii). The rule does not require that the written agreement include reinstatement privileges for the borrower.

The staff commentary states that some limitations apply to the written agreement. For example, the written agreement “could not permit the creditor to later change the credit limit except by a subsequent written agreement or in the circumstances described in §1026.40(f)(3)(vi),” meaning that the customer must agree in writing to any subsequent lowering or freezing of the line. If a borrower wants to reinstate the line after agreeing to a reduction or freeze, this could likely be accomplished by entering into another written agreement (under 12 CFR 1026.40(f)(3)(iii)), or possibly without a new agreement, as a change that “will unequivocally benefit the consumer throughout the remainder of the plan (under 12 CFR 1026.40(f)(3)(iv)).

(Also note that whenever the bank increases a line of credit secured by a customer’s principal dwelling, it must provide the customer with a notice of the right of rescission. 12 CFR 1026.15(b).)