For purposes of this chapter “home equity loan” means any open end consumer credit plan in which a consensual security interest is created or retained against the consumer’s dwelling.
Chapter 2aHome Equity Loan Disclosure Act
Section § 2970
This law defines a 'home equity loan' as a type of credit where you borrow money using your home as collateral. It specifically refers to credit plans where you can repeatedly borrow up to a certain limit, similar to a credit card.
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Section § 2971
When you apply for a home equity loan, the lender must inform you that the loan is secured by your home, meaning that if you don't pay back the loan, you might lose your home. This warning has to be given right when you apply in person, or within three days if you apply by mail or phone. The lender can provide this caution either on a separate document or directly on the application form. If a similar warning is already required by federal law and the lender follows that, it counts as meeting this requirement.
(a)CA Civil Law Code § 2971(a) At the time that a customer makes an initial application to a creditor for a home equity loan in person, or within three business days if the customer applies by mail or telephone, the creditor shall provide the applicant with a disclosure in either of the following forms:
(1)CA Civil Law Code § 2971(a)(1) The statement: “This home equity loan that you are applying for will be secured by your home and your failure to repay the loan for any reason could cause you to lose your home!”
(2)CA Civil Law Code § 2971(a)(2) A statement to the effect that a home equity
loan is secured by a lien against the home of the consumer and in the event of any default the consumer risks the loss of the home.
(b)CA Civil Law Code § 2971(b) The disclosure required in subdivision (a) shall be made by either of the following means:
(1)CA Civil Law Code § 2971(b)(1) A separate and specific document attached to or accompanying the application.
(2)CA Civil Law Code § 2971(b)(2) A clear and conspicuous statement on the application.
(c)CA Civil Law Code § 2971(c) If a creditor is required by federal statute or regulation to make a substantially similar disclosure to that required by subdivision (a), and the creditor complies with that federal statute or regulation, the creditor shall be deemed to have complied with the requirements of this chapter.
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