By the Division of Banks

Finance Charge Limitations For Home Equity Lines Of Credit

It has been the consistent position of the Division of Banks that a home equity line of credit is open-end credit under the provisions of Mass. Gen. Laws chapter 140 § 114B and the maximum interest rate is 1½% per month or 18% per year, subject to certain other provisions, and not the small loan annual rate of 23% plus a $20.00 administrative fee. Furthermore, an equity line of credit is secured by real estate because the equity which may be accessed against the line is the equity which exists in the real estate. The Division treats individual advances of $6,000.00 or less on an equity line of credit as small loans for the purpose of licensing. For other aspects, however, an equity line of credit is governed by the provisions of Mass. Gen. Laws chapter 140 § 114B.