There should be less restrictive HELOCs which base the high price off of average appreciation over several decades (more conservative estimate) but let you spend it on whatever you want and then HELOCs which take whatever the appraiser says but requires oversight so that you invest in something that will actually improve your financial situation (home improvement, pay off higher interest student loan debt, etc).

That makes zero sense. If the less restrictive HELOC is based on average appreciation going forward, then people could borrow MORE than the more restrictive HELOC (which is based on a % of current appraised value). Shouldn’t this be the other way around?