I just don’t see how it’s possible for a lender to “police” what a borrower does with his/her HELOC proceeds.
The only “reasonable limitations” that I know of in “technically” non-purchase-money RE lending is in the case of a construction loan, where a lender will release to the general contractor only that portion which is now due for work completed or materials to be purchased.
A typical construction-loan borrower can’t use this type of loan as he wishes and doesn’t usually have direct access to the proceeds.
