BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551

DIVISION OF BANKING

SUPERVISION AND REGULATION

DIVISION OF CONSUMER AND 

COMMUNITY AFFAIRS

SR 14-5

CA 14-4

July 1, 2014

TO THE OFFICERS IN CHARGE OF SUPERVISION AND APPROPRIATE 

SUPERVISORY AND EXAMINATION STAFF AT THE FEDERAL RESERVE 

BANKS AND FINANCIAL INSTITUTIONS SUPERVISED BY THE FEDERAL 

RESERVE

SUBJECT: Interagency Guidance on Home Equity Lines of Credit Nearing Their End-ofDraw Periods

Applicability to Community Banking Organizations: This guidance applies to all institutions 

supervised by the Federal Reserve, including those with $10 billion or less in total consolidated 

assets. 

The Federal Reserve, along with the other federal financial institutions regulatory 

agencies1 and the Conference of State Bank Supervisors, issued the attached guidance to reiterate 

principles of sound risk management for home equity lines of credit (HELOCs) that have 

reached or will be reaching their end-of-draw periods. The agencies expect supervised 

institutions to have adequate risk management practices to monitor, manage, and control the 

risks in their HELOC portfolios as lines near their end-of-draw periods as well as to promote 

compliance with applicable laws and regulations. 

Building on previously issued guidance, this HELOC guidance describes risk 

management practices that promote a clear understanding of potential exposures and help guide 

consistent, effective responses to HELOC borrowers who may be unable to meet contractual 

obligations at their end-of-draw periods.

2

 Additionally, the guidance highlights concepts related 

to financial reporting for HELOCs. 

1 The other federal financial institutions regulatory agencies include the Federal Deposit Insurance Corporation, the 

National Credit Union Administration, and the Office of the Comptroller of the Currency.

2 The guidance includes references to relevant existing guidance that should be considered by a supervised

institution in developing its risk management practices for HELOCs.

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Reserve Banks are asked to distribute this letter to the supervised institutions in their 

districts and to appropriate supervisory staff. Questions regarding this letter should be directed 

to the following individuals: 

• Division of Banking Supervision and Regulation: David Emmel, Manager, at 

(202) 912-4602; or Donald Gabbai, Senior Supervisory Financial Analyst, at 

(202) 452-3358. 

• Division of Consumer and Community Affairs: for general questions, Amal Patel, 

Senior Supervisory Consumer Financial Services Analyst, at (202) 912-7879; and for 

operational questions, Tim Robertson, Manager, at (202) 452-2565.

In addition, institutions may send questions via the Board’s public website.3

Maryann F. Hunter

Acting Director

Division of Banking Supervision

and Regulation

Tonda Price

Acting Director

Division of Consumer

and Community Affairs

Attachment: 

• Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw 

Periods

Cross-reference to:

• SR letter 13-17, “Interagency Supervisory Guidance Addressing Certain Issues Related to 

Trouble Debt Restructurings”

• SR letter 12-3, “Interagency Guidance on Allowance Estimation Practices for Junior Lien 

Loans and Lines of Credit”

• SR letter 05-11, “Interagency Credit Risk Management Guidance for Home Equity 

Lending”

• SR letter 00-8, “Revised Uniform Retail Credit Classification and Account Management 

Policy”

• Federal Reserve Board’s real estate lending standards regulation and guidelines 

(12 CFR part 208, subpart E and Appendix C to subpart E)

3 See http://www.federalreserve.gov/apps/contactus/feedback.aspx

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