I agree that the value of my home has declined but I do not think that it was a significant decline. Does the law define what constitutes a significant decline?

Under federal law, what constitutes a significant decline will vary according to individual circumstances. The general rule of thumb is that if the value of the home declines so that the initial difference between the credit limit and the available equity when the HELOC was approved is reduced by 50 percent, the decline is "significant."

Here is an example:

Assume the home has an appraised value of: $100,000

First mortgage on the property in the amount of: $50,000

HELOC on the property in the amount of: $30,000

The difference between the appraised value and both loans when the HELOC was approved is: $20,000

50% of the difference is: x 0.5/$10,000

For this example, a decline of $10,000 in the appraised value of the property from $100,000 to $90,000 would be considered significant and the bank could prohibit further advances or reduce the credit limit. Your bank may need to evaluate smaller declines in the property value on the basis of the specific circumstances to determine whether the decline is "significant."