Lending Compliance For Balloon Loans – ON-DEMAND WEBINARS


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Date Recorded: May 14, 2021

Presenter: Anetria Cohen, Vice President and Senior Consultant, FORVIS

A two-hour webinar covering lending compliance as it relates to balloon loans – both closed-end and HELOCs.

Balloon loans that are secured by a dwelling are inherently risky for a consumer. Although creditors and borrowers assume the loan will be refinanced or modified, this may not be the case and a consumer may lose their home if they can’t pay the balloon payment. Thus, the Truth-in-Lending Act/Regulation Z has special requirements for balloon loans when the transaction is secured by a dwelling.

For closed-end loans, the Ability-to-Repay provisions are very particular about when and how an institution may underwrite a balloon loan (excluding 12 month or less construction loans/phases), and the Loan Estimate and Closing Disclosure will disclose the balloon payment in multiple ways.

For home equity lines of credit, balloon payments can result if the creditor doesn’t have a repayment period or allows the borrower to pay less than interest-only payments. The creditor is also required to make certain balloon disclosures.

The revisions to balloon loan provisions have led many financial institutions into having misconceptions about the rules regarding balloon loans, including a belief that institutions may not make balloon loans anymore – which is incorrect. However, in order to make balloon loans, financial institutions must understand these complicated and strict requirements. This two-hour webinar will focus on how dwelling-secured balloon loans and lines of credit are specially treated under Regulation Z.


  • Definition of balloons
  • Refinancing/modification
  • Closed-end requirements:
    • Disclosure: the TIL Statement and the Loan Estimate and Closing Disclosure
    • Ability-to-Repay, including Small Creditor Balloon Payment Qualified Mortgage (including the importance of rural/underserved and the definition of small creditor)
    • High-cost loans (HOEPA)
  • Open-end disclosure requirements and guidance on HELOCs with no repayment period
Who Should Listen

This informative webinar is designed for compliance officers, compliance staff, loan processors, and auditors who must understand this important issue. Loan officers and those with compliance management or training responsibilities will also benefit from this valuable webinar.

Program Level: Basic

Prerequisite/Advanced Preparation: Basic Knowledge of Lending Regulations

Field of Study: Specialized Knowledge

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