Conference 7.286::dcu

    This is an official response by John Tilley of the DCU. The portion of
    that response, dated 1-JUN-1988, that applies is included below. 
    
    Whether you agree or disagree with the response from the DCU,
    *PLEASE* remember I'm just the MESSENGER.
    
    Carl Leeber
    
    {Please note those words starred and in all *UPPER* case were
    underlined in the official response from the DCU.}
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    Home equity loans are *SECOND* mortgages. They are *SECOND* liens
    against the property. There must be a *FIRST* lien on file with the
    registry of deeds to place a second lien. The first lien DOES NOT
    have to be a typical first mortgage loan through a financial
    institution. A small lien can be filed by an individual simply by
    completing a form and paying a nominal fee at the registry of deeds.
    DCU, or another bank, can then file the second lien for the home
    equity loan.
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    Why then was I able to secure a equity line of credit with the Bank
    of New England without a first mortgage on my property?

Yes, I don't think you'll ever catch a REAL bank insisting that their 
                                                 ^^^^^^^^^
lien be put in line behind someone elses....

        I'm not expert in the Federal and state regulations that apply to
        what the DCU can and cannot do.  It may be that they're only able
        to offer this particular kind of loan as a second mortgage. 
        
        Yes, the DCU is not a "real bank", in the sense that it is a
        Credit Union, and thus operates under different rules and
        regulations than apply to "real banks".  You always have the
        choice of doing business elsewhere if the DCU's policies and
        procedures don't meet your needs, or of working with the DCU's
        management to get the policies and procedures changed.  Making
        cynical remarks here doesn't change policies.  Making positive
        suggestions might.

        Tom

RE: -.1 (Dr. Blinn)  my remark was not cynical, but constructive,
I'm sorry its meaning escaped you.  Let me explain in more detail... 

A second mortgage is exactly that, the lienholder is SECOND in line
behind the primary mortgage holder in the event of default. I am
suggesting that DCU management, by turning a possible borrower away
until the borrower gives <someone else> a lien on his property first,
is not acting as prudently as they could.  As a DCU member, I would
prefer to see DCU offer to be the primarly lienholder, so that in the
event of default, they are more assured of recouping any potential
loss. 

    I think that "DCU" is not the "real" name (!) but has the word
    "Federal" in it.  That means that it is chartered by the federal
    govt. as a credit union and follows certain rules different from
    the rules followed by other banks. Among them is that this particular
    credit union cannot issue first mortages, only seconds. A silly
    rule if it serves no useful purpose and can be gotten around so
    easily.
    
    I'd still like to know WHY no "firsts".
    
    	RMM
    

DCU does issue first mortgages

        I think the question boils down to this:
        
        If the DCU will issue a "first mortgage" for a home purchase,
        why can't it issue a "first mortgage" for a home equity loan?
        
        I suspect the answer involves rules around introducing products
        that might make no sense to you or I (and may not even make
        sense in the broader scheme of things), but exist due to the
        regulations under which DCU must operate.
        
        Perhaps our "official" DCU contact can elaborate.
        
        Tom

    The question in 98.2... 98.8 still has not received an "official"
    reply.  Are we supposed to keep guessing until we get it right????
    
    
    	Rick
    	Merrill