Home Equity Loan Disclosure Act of 1987

Home Equity Loan Disclosure Act of 1987 - Amends the Truth in Lending Act to require that any written application for a home equity loan include information concerning the applicable interest rate, interest rate adjustments, transaction fees, repayment options, additional charges, a booklet including specified consumer information, statements concerning whether the loan is secured by a lien against the consumer's dwelling, the consequences of default, and the limits on the deductibility of interest payments under State and Federal tax laws.

Requires that each percentage rate disclosed be represented as an annual percentage rate, with respect to open end credit plans, and as a nominal annual percentage rate, with respect to closed end credit plans.

Sets forth disclosure requirements for "teaser" rates (i.e., introductory, non-periodic or annual, interest rates). Requires that any disclosure include a statement of whether the terms are guaranteed (and under which circumstances such guarantee may cease to be effective) or not guaranteed.

Sets forth requirements for home equity loans which are subject to a variable rate of interest, including: (1) limiting the annual rate increase; (2) prohibiting creditors from imposing a minimum annual percentage rate; (3) allowing rate changes to be computed only on the basis of an index which is not under the control of the creditor and which is available to the public; (4) prohibiting an increase in the teaser rate during the first year; and (5) making any rate increase applicable only to new extensions of credit.

Requires that the payment schedule for each extension of credit under a home equity loan fully amortize principal and interest over a fixed period of time. Prohibits a repayment schedule which would permit negative amortization.

Prohibits the extension of credit beyond a specified amount and allows the maximum amount of any home equity loan to be reduced in areas of declining property values. Declares that subsequent purchasers of loans are subject to all defenses of the borrower against the original creditor.

Prohibits creditors from unilaterally changing contract terms, or reserving the right to do so, except for specified reasons. Defines "home equity loan" as any open end consumer credit plan in which a consensual security interest is created or retained against the consumer's dwelling.

Requires that any advertisement relating to a home equity loan which refers to any term or provision required to be included in any loan application under this Act include specified information concerning the applicable interest rate, interest rate adjustments, transaction fees, additional charges, consequences of default, the limits on the deductibility of interest payments, and introductory rates. Prohibits the use of advertisements for any home equity loan which refer to such loan as "free money" or as a "loan at prime" with a specified exception.