Home Equity Loan Terms Can Change

More than half the financial institutions surveyed by a consumer group reserve the right to make changes in home equity loan terms, including raising the interest rate and demanding immediate repayment.

The Consumers Union, the publisher of Consumer Reports, surveyed 45 institutions: 10 major banks and five major savings and loan institutions in each of three metropolitan areas--Washington, New York and San Francisco.

The group, which is pushing Congress to enact legislation barring institutions from making unilateral changes in home equity loans, said 62% of the institutions responding to its survey reserved the right to make such changes.

All of the lenders used variable interest rates, the group said. Although the law requires caps on the interest, 58% of the institutions set caps at more than six percentage points above the initial rate or higher than 17 percentage points.