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TEST Our core system permits us to calculate interest on HELOCs through the next due date, instead of the current billing date. For example, if you have a brand new HELOC, the first periodic statement would include interest earned in the first 30 days and the next 30 days. The second periodic statement will adjust the calculation of interest to account for any changes in the loan principal and then add an estimated interest for the next thirty days. In effect, we would be collecting interest that has not yet accrued. Our loan agreement states that the borrower pays accrued interest, not projected interest, so we would have to change our loan agreement before electing this option. One suggestion was that this calculation method is more common at credit unions. – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

TEST Our core system permits us to calculate interest on HELOCs through the next due date, instead of the current billing date. For example, if you have a brand new HELOC, the first periodic statement would include interest earned in the first 30 days and the next 30 days. The second periodic statement will adjust the calculation of interest to account for any changes in the loan principal and then add an estimated interest for the next thirty days. In effect, we would be collecting interest that has not yet accrued. Our loan agreement states that the borrower pays accrued interest, not projected interest, so we would have to change our loan agreement before electing this option. One suggestion was that this calculation method is more common at credit unions.

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Our core system permits us to calculate interest on HELOCs through the next due date, instead of the current billing date. For example, if you have a brand new HELOC, the first periodic statement would include interest earned in the first 30 days and the next 30 days. The second periodic statement will adjust the calculation of interest to account for any changes in the loan principal and then add an estimated interest for the next thirty days. In effect, we would be collecting interest that has not yet accrued. Our loan agreement states that the borrower pays accrued interest, not projected interest, so we would have to change our loan agreement before electing this option. One suggestion was that this calculation method is more common at credit unions.