It sounds like a marketing term for a regular mortgage.
Um, no it doesn't. It sounds more like what K-ice explained below.
My questions would be 1. Is the rate fixed? and 2. If your mother pays it down and then needs to borrow against it, will the rate be the same and will it be fixed?
This could be a good product if the rates are guaranteed. if not, consider a straight up re-fi to a new, cheap 15- or 30-year mortgage. Paying off her house is far less important than having a payment that is fixed and affordable.
BTW, lenders can name their loans anything they want to. I suggest you call them yourself and ask questions until you're blue in the face, if that's what it takes to understand what is being offered.
I agree that they can name their products anything they want, and I second your recommendation to contact the bank and ask questions to clarify all of this. OP, if you have issues, feel free to drop a link to the credit union's website and we can help interpret their marketing.
Diane - Apparently this sounds like different things to different people :). The parts that stood out to me indicating it was most likely a regular refinance, are that i.) the Credit Union quoted a 12 year repayment period, which they could only do for a fully fixed rate option ii.) there's no disclosure of 'variable', 'adjustable', 'line of credit', or any other hallmarks of a HELOC. In my experience those are some of the first things the banker would bring up, especially with all the new scrutiny that came out of the recent recession. iii.) her payment would only drop $100, so it surely is not interest only iv.) It's becoming common for Bank's and CU's to offer "no fee" refinance programs, and the pricing being offered is roughly in line with those (and too low of a rate for a HELOC fixed rate option of 12 years, IME). This no fee refinance is what I'm referring to as a regular mortgage in my other post, since it's fixed rate, fully amortized, and first position. I'm curious what stood out to you indicating it was a "HELOC Mortgage" as K-Ice described (which from the sound of it was a standard HELOC FRO).
ETA:
If your mother pays it down and then needs to borrow against it, will the rate be the same and will it be fixed?
I can't imagine that even a credit union would offer an open ended fixed rate loan! They do some wild stuff, sure, but that.. is beyond the pale.