ING CEO addresses HELOC concerns

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ING has now launched a charm offensive focused on addressing any consumer – and, indeed, broker – concerns around HELOCs, expected to formally hit the channel in the first quarter.

“Despite their bad rap, HELOCs, used as intended, can help,” said ING Direct CEO Peter Aceto in a tweet Monday, referencing criticism about the potential for consumer abuses with those lines of credit.

The tweet is one of several over the last few weeks and linking to ING articles explaining the new HELOC, introduced to the market late last year. While the product is being beta tested with a select number of brokers, it is expected to get launched across the channel within weeks. It is already available to the lender’s retail clients.

“We’ve heard countless examples of how HELOCs are sold irresponsibly by financial institutions – where they essentially push more credit on people than is required, requested, or that they can afford,” writes Aceto in the article linked to Monday’s tweet. “On the other side of the coin are some people who have misused HELOCs, essentially treating their homes as ATMs to finance depreciating assets like big screen TVs, cars and even their purchases at the Beer Store versus home renovations or unexpected repairs.”

ING has, in fact, designed its HELOC to mitigate if not avoid all of those abuses, said Aceto.

Its HELOC is not linked to an ATM card, “which means it requires a sober second thought to access the credit and makes it less accessible for non-essential purposes,” he writes. “Our staff won’t be incented to provide more credit than is needed or requested. We’re helping clients set up a regular fixed payment plan up front so that they can pay it off faster, and not get trapped into making only minimum payments.”

Still, brokers have expressed their own concerns around the collateral charge aspect of those lines of credits as well as the lender’s move to register all its mortgages under that model.

That hasn’t limited interest, with brokers involved in the beta testing of the ING HELOC using it as a way of broadening their business as new purchases slow.

  • Eric Putnam on 2012-01-12 2:31:19 AM

    A HELOC can be great if used wisely but ae NOT for everyone! You MUST first have control of your spending and clear financial goals. You must not think of the LOC as an extra source of cashflow OR it can be dangerous and cause serious financial issues. Check out this related Globe and Mail video interview of The Wealthy Barber discussing HELOC

  • DJP on 2012-01-12 5:16:23 AM

    HELOCs can, and are, nice tools for what they were intended for. The fundamental Broker issue is when Banks register HELOC Charges at 100% of assessed/market value effectively using the document as a defensive client retention tool to block possible third party involvement. Charges are often registered for considerably higher levels than what client TDS could ever afford or, as even permitted by Federal LTV rules. Effectively, through the above practice, Banks effectively deny HELOC clients any financial recourse outlet for 2nd mortgages from other sources should that critical need be required. I doubt this information is disclosed to clients being swayed into HELOCs.

  • George on 2012-01-12 5:32:51 AM

    The real concern with the new ING charge is that it is registered for 100% of the purchase price not the actual loan amount. Other lenders will register for more BUT it is optional. The 100% lien could cause clients considerable problems and expense down the road.

  • GTA Broker on 2012-01-12 5:34:11 AM

    Amen DJP.Notes below are not aimed at just ING
    As well as prom notes signed at rates significantly higher than originally charged.Why? Notice the marketing ploy of calling them HELOCs, not second mortgages or collateral charges.
    Collaterals will be the death of the brokerage industry in more than one way 1) handing over your client to an FI, in essence for life 2) Some agent broker/agent is not going to make an appropriate written & verbal disclosure of the risks to the borrower, a lawsuit will evolve & we will all be painted as bad guys.
    Disclose, disclose,disclose.

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