It is perfectly legal. There is no obligation on the part of any particular bank or lender to offer home equity loans at all; and if they do, they may put essentially any limitations on eligibility for said loans that they want (other than limitations based on sex, color, national origin, religion, etc.). It is a non-discriminatory, not illegal, and reasonable limitation to not offer loans where they have no branches; therefore, they may refuse to loan for this reason. You will have to apply to some bank for a home equity loan.