Conference 7.286::dcu

    Hey Bill, thanks for posting things so that NEXT UNSEEN finds the
    minutes before the comments on them!  I know you thought it was a dumb
    request, but it is a nice touch.

	Paul

    
    Opps! My mistake -- I'll fix it next time.
    

>> d. Home Equity Line Modification
>>
>> Mr. Gray reviewed a recommendation to modify the terms of the DCU Home Equity
>> Line of Credit Loans listed as loan type 45s (HELOCS made between 1984 and
>> October 30, 1989) to adjust on a monthly basis to the Wall Street Journal
>> Prime Interest Rate plus 1.0% starting on June 1, 1995.  This will put these
>> lines at .5% below DCU's currently offered Equity Line.  All other terms and
>> conditions of these notes will remain unchanged.
>>
>> X
>> X
>> X
>> X
>>
>> * It was moved by Mr. Gillett and seconded by Ms. Dawkins to approve the
>> modification of the terms of the DCU Home Equity Line of Credit Loans listed
>> as loan type 45s as written.  Motion carried unanimously.

This must be good news for the folks who have these credit lines!  Can they
change notes like this?  There must be language that says they can.  It would be
a bummer if they changed it the other way, so the rate went up.

Now if they could just change the rate for everyone else, we'd be in business. 
Let's get better than competitive!

>This must be good news for the folks who have these credit lines!  Can they
>change notes like this?  There must be language that says they can.  
>It would be a bummer if they changed it the other way, so the rate went up.

I think you have it wrong. The rate is going up by 1.5% not down .5%!
in one month my rate goes from 8.5% to 10%, then it will vary every month
after that automatically. Before the BOD had to take an action to change this
type of loan. I am trying to find my original contract to see if a 1.5%
change in one month is legal.

						Jim

Re: .4

I see what you mean.  I re-read the minutes, and it said the rate will be less
than what is being charged for new home equity lines of credit, but it did not
say what the previous terms had been.  Are you saying that previously, you had
paid 1/2% *BELOW* prime?

Elaine

Yes - it appears that the current rate of 8.5% is .5 below prime. I also
got the notice that it was going up to 10% next month, and am not pleased.
That is _NOT_ the agreement I signed when I took out the loan, and I'm
unsure where the hell DEFCU thinks they can get off doing that to us.
The original agreement, if I'm not mistaken, allows for an annual adjustment
of the rate with a lifetime cap of some number of points +/- what the
original rate was. According to this new plan it would appear that they
haven't any responsibility to be concerned about the cap. I'd be damn
surprised if it's even legal for them to make a change like this on
outstanding loans which didn't make this provision when agreed to.
And that business about "if you don't like it, you can always pay
it off and not be subject to it" won't wash, either.

-Jack

	The current rate is not held to any index at all, it is reviewed 
	by the BOD monthly and adjusted if they think it needs to be.
	I believe that they wanted to increase the rate but did not have
	the nerve to make such a large (1.5%) increase all at once, and 
	they also did not want to make 3 or 4 smaller increases mouth 
	after mouth so they hid the gigantic rate increase with this 
	slight of hand change. Like it is a new and improved program.

					Jim

>	The current rate is not held to any index at all, it is reviewed 
>	by the BOD monthly and adjusted if they think it needs to be.

While the above may be true for new loans, I do not believe that existing
2nd mortgages allow for an adjustment in the rate other than once annually.
Mine has always been adjusted in January in the past.

I have a copy of the mortgage agreement referenced in this string at
home.  I will check and report back on the exact wording of the
agreement.

My memory tells me that the .7 is correct and that the rate is
set by the BOD.  For a while now, the holders of this mortgage
have been getting a super rate while those DCU members who took
out a home equity loan after 10/89 were paying 1�% above PRIME (10.5%)
and have been paying it for about 6-9 months now.


Gim



                 

I'm at home and reading the Home Equity Line agreement. It states:

"Changes in terms
	Any terms or conditions of this loan, without limitation,
	provisions relating to the rate or method of computing the
	FINANCE CHARGE or relating to the minimum periodic payment
	may be changed upon our sending written notice to you of such
	change at least 15 days before the billing cycle during which
	the change becomes efective....

 The maximum interest rate over the life of the loan will not exceed
 18%."

Because of the "without limitation" clause in this agreement,
I cancelled my home equity line with the DCU.

However - given the competitive rates offered by the DCU, Prime plus
1.0% isn't that bad. It's 0.5% better than most.  There are a few
banks that offer PRIME + 0%.  Now that would be a great rate.

Gim

    

Bank of Boston's Home Equity is like that and they made big changes midstream
a few years back. And have you checked your credit card agreements, eg my
Discover Card agreement has a whole section in bold print that reads in part:
"23. Change of Terms.  We may change any term or part of this Agreement,
including any finance charge rate, fee or method of computing any balance upon
which the finance rate is assessed, by sending you a written notice at least 30
days before the change is to become effective. We may apply any such change to
the outstanding balance of your Account on the effective date of the change and
to new charges made after that date. ..."

Don't like the change? Take a walk - lots of banks are still doing good deals on
home equity loans. Saw one for Fleet Bank (I think) in the Boston Globe some
time in the past week. It's like Prime -1.01% till some time in '97, if I recall
correctly. I looked around when BoB handed me their "all new and improved" ;-)
loan, but didn't find one whose overall terms I liked better. I check out most
of the local banks every year or so to see if I can snag a better deal somewhere
else.

						Trace

re: .10, Gim

Is that agreement/T&C dated? My 2nd mortgage goes back to '86 and I'm
curious as to whether the conditions have changed over time.

re: shopping around

That's great if you can do it. Not everyone can.

RE: .11

> The "anything can change at anytime" wording is pretty standard 

Most home equity credit lines set the interest rate based on an
index. My current home equity credit line agreement clearly states
the index to which the rate is tied it... and it doesn't have the
above clause. Prior to this announcement, this series of DCU loans
had the interest rate set by the DCU subject only to the MAX of
18%.

I would never (again) sign any mortage with the above clause.

Your point on credit cards is well taken - not too many people
read the fine print.  There are, however, major differences between
a credit card is not a mortgage.

RE: .12

My T&C was dated 8/89.

Gim

    Do we have the ability to address this. I think it is outrageous that
    DCU just announces that my 2nd mortgage rate is going to increase by
    17.64% (1.5/8.5) and I have no recource. Was there any discussion of
    how this would impact long term DCU 2nd mortgage  holders. Who should I
    call to express my outrage.
    
    peter

> Who should I call to express my outrage.

"Another lender" springs immediately to mind.

In this situation, the DCU missed on two counts:

1.  when the prime rate dropped to 6.0% in 1993 and 1994, the
    rate on this home equity loan stayed at 8.5%.  

2.  when the prime rate increased to the current 9.0%, the
    rate should have go up to 10.5%.  But the DCU kept it at
    8.5%, perhaps to make up for #1.

Better communications would have avoid the outrage felt by members.

Gim