Yes, we believe you may add a provision to your HELOC agreement that requires the customer to pay off and close a credit card account (we do recommend consulting bank counsel when drafting this change to your agreement). The same answer would apply equally to other types of consumer-purpose loans (including our recommendation to consult with bank counsel before altering other loan agreements).

We would recommend treating this communication as a counteroffer under Regulation B’s adverse action notice requirements. Under Regulation B, a counteroffer is an offer “to grant credit . . . on other terms” than the applicant’s requested terms. Here, your counteroffer is to provide a HELOC with an additional term, that being the requirement to pay off and close another line of credit. If the applicant accepts your counteroffer, no adverse action notice is required. However, if the applicant does not accept your counteroffer, your bank must provide an adverse action notice within ninety days after notifying the applicant of the counteroffer.

For resources related to our guidance, please see:

• Regulation B, 12 CFR 1002.2(c)(1) (“Adverse action” means “a refusal to grant credit in substantially the amount or on substantially the terms requested in an application unless the creditor makes a counteroffer (to grant credit in a different amount or on other terms) and the applicant uses or expressly accepts the credit offered.”)

• Regulation B, 12 CFR 1002.9(a)(1) (“A creditor shall notify an applicant of action taken within: . . . (iv) 90 days after notifying the applicant of a counteroffer if the applicant does not expressly accept or use the credit offered.”)