Revolving home Equity line of Credit

During 2005, the defendant, Antonios Feggoudakis, bought a real estate mortgaged by a security loan that secured his vendor's credit line for home loans. Feggoudakis has presented the claimant, HSBC Bank, USA, with a cheque adequate to pay back the then outstanding home equity line of credit and HSBC has lodged the cheque, but HSBC alleges that it has not received a positive application in writing to shut down the line of credit and relieve the hypothec.

During 2008, the defendant sellers drew down new assets against the credit line, which they did not reimburse as a result. As a result, HSBC initiated enforcement procedures against the mortgages on the land held by Feggoudakis. Mr Feggoudakis relocated to reject HSBC's claim concerning him and argued that HSBC should have shut down the credit line in 2005.

The Complaints Division stated that'the simple submission of a cheque for the amount required to settle the total amount due on a credit line, together with an accompanying note which does not indicate that the amount is due to settle the credit line, or the invitation to the creditor to submit a settlement of the hypothec or otherwise indicate that the debtor wishes to terminate the credit line, does not oblige the creditor to terminate the credit line, or a settlement of the hypothec under FPAPL.

" Feggoudakis, on the other hand, trusted the winding-up agency to give an assurance in lieu of an oath in which he stated that his usual policy was to mail the paying-out cheque to the creditor together with a covering note in writing in which he requested the closure of the loan and a write-off. Feggoudakis' application for dismissal was rejected, but the Court pointed out that the statutory declaration raises a valid factual question as to whether a documentary application had been made to HSBC.

Even though this case arose within the framework of a private credit line, there is no cause to question that their participation would be applied to a private credit line. Borrower and their attorney should be alert to ensure that line of credit loans are not just downloaded, but the loan that has been explicitly approved and unloaded.