A home equity line of credit, or “HELOC,” is a loan product that allows a consumer to borrow money, using their equity in their home as collateral.
William Lyons had taken out a HELOC from a predecessor to PNC Bank. Years later, PNC withdrew money from Lyons’ deposit account to offset outstanding payments on the loan, which Lyons claimed was unauthorized. He then sued under the Truth in Lending Act (TILA) and the Real Estate Settlement Practices Act (RESPA).
A federal district court ruled against Lyons, holding that neither TILA’s prohibition on creditors dipping into consumers’ deposit accounts to offset outstanding payments nor RESPA’s notice and disclosure requirements applied to HELOC’s. Lyons appealed to the Fourth Circuit. On appeal, as amicus, the CFPB argued the district court was wrong as to TILA but right as to RESPA. In a divided opinion, the Fourth Circuit agreed with the CFPB.
As to TILA, the majority held that the statutory term “credit card plan” included HELOCs, undertaking an extensive analysis of the statutory and regulatory history, language, and context. As to RESPA, the court (unanimously) held that the CFPB properly exercised its “exemption” authority when it excluded HELOCs from the relevant requirements of the statute.
