Question: Home Equity Line of Credit

Question for my readers.

My parents recently went to the bank to open a savings account.  The associate who assisted my parents asked them if they had a mortgage, and my parents said no.  He then asked if they had a home equity line of credit, to which my parents also said no.  He then asked if they would like to open a line of credit with them, to prevent a second mortgage to be taken out under my parents’ property by someone else.

Ummm.  What?!

My parents declined, but when they told me this, it really bugged me.

These are my thoughts:

  • The bank is not making (as much) money off my parents since they don’t have debt (no mortgage, no line of credit, no vehicle financing, nada)
  • The bank is using a scare tactic to get my parents to take out money so they can make money off the interest
  • What kind of a bank allows someone other than the owners take out a mortgage on a property they do not own? Don’t they require proof of ownership?
  • Even when someone signs up for a credit card they need to provide proof of employment – how is this any different than a mortgage (or second mortgage) and proof of ownership?

Readers, does what this associate say have any merit?  Or is he just trying to make a sale by a (pathetic) scare tactic?  Have you had any experience with this?

Thanks for your help.

Update: I’ve had readers question which bank I am referring to.  I am in Canada and the bank is TD Canada Trust.





Filed under Finance, Personal

6 responses to “Question: Home Equity Line of Credit

  1. This is what I hate about working at the bank.

    We have sales goals and are basically forced to sell. I think that is retarded that the guy was trying to offer a HELOC when all your parents were wanting was to open a savings account.

    I hate that businesses have come down to this. I think the banks are rich enough that they don’t have to go feeding for every last bit of interest. I know our assets are their liabilities but I wish the world would care more about the financial stability of it’s people than by their own billions of dollars rolling in, which will still roll in no matter what.

    Leave the financially stable alone.

    Sheesh. /end rant

    I also have no idea what he meant by preventing someone else. I agree with what you said in your third and fourth points. I don’t know much about HELOC’s or anything like that. I’m just forced into trying to sell overdraft protection and Visa’s. :\

    Sell, sell, sell. That’s what it’s all about, and is one of the reasons why I am kinda leaning towards becoming a CFA instead. Analyze the industry, not partake in it and become an annoying salesperson.

    • I think it’s great that banks offer so many services, but I also think that they shouldn’t be scaring people into buying their products when they don’t need it. These are people’s hard earned money that they are trying to squeeze out every drop of.

  2. yesiamcheap

    Was this at Chase? Because I have heard some horrible S-H-I-T from the representatives at Chase. You go in for the simplest thing and they want to push the world on you, and I hate their tactics. I know that they have to meet sales goals, but really? Come on! I HATE going in there and just try to call on the phone if I need something because of these tactics.

  3. I suppose this is a benefit of opening an account online?

    I can’t believe the guy would even suggest that his bank wasn’t secure enough to check the names on a mortgage before issuing a line of credit. I would have turned that right back on him. “So you’re saying that the security is so poor here that no proof of ID is required for a line of credit? Why would I want to bank here again?”

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