In regards to the six-transaction limit imposed in Regulation D, can a bank reduce this limit to only two transactions?
Yes, the bank may set stricter limits than required under Reg. D. There is not a prohibition in doing using a stricter limit as long as it is disclosed in the bank's account agreement to avoid any potential UDAAP issues.
Regarding CTRs, when there is an aggregated transaction, what are the requirements in order for the transaction to be considered an aggregated transaction?
The bank would report as an aggregated transaction only if, 1) the financial institution did not identify any of the individuals conducting the related transactions, 2) of all the transactions were below the reporting requirement, and 3) at least one of the aggregated transactions was a teller transaction. All three requirements must be met.
27. When do you check the “Aggregated transactions” box (Item 24)?
Filers should check box 24e “Aggregated transactions” (along with any other box applicable in Item 24) only in the following circumstance: 1) the financial institution did not identify any of the individuals conducting the related transactions, 2) all of the transactions were below the reporting requirement, and 3) at least one of the aggregated transactions was a teller transaction. If the aggregated transactions being reported included only deposits made via a night depository, the financial institution would not check “Aggregated transactions” as none of the aggregated transactions were a teller transaction; instead, the financial institution would check Item 24 “Night Deposit.” A “teller transaction” would include, but would not be limited to: the deposit or withdrawal of currency by an individual at the teller window, an individual making a loan payment with currency at the teller window or, an individual exchanging currency at the teller window. The option “Aggregated transactions” is not the same as Item 3 “Multiple transactions,” which can involve transactions that are above the reporting requirement.
Frequently Asked Questions Regarding the FinCen Currency Transaction Report (CTR) #27: https://www.fincen.gov/frequently-asked-questions-regarding-fincen-currency-transaction-report-ctr
Our bank has a question for CRA reporting. When we have a start-up businesses, do we report the revenue as "unknown" since there is no real revenue information (only projections)?
For start-ups, the bank should use $0 if the business is pre-revenue. The bank will not use any pro-forma or projected revenue figures.
For a start-up business, the institution should use the actual gross annual revenue to date (including $0 if a new business has had no revenue to date). Although start-up businesses will provide the institution with pro forma projected revenue figures, these figures may not accurately reflect actual gross revenue and therefore should not be used.
A Guide to CRA Data Collection and Reporting (Page 14 of 2015 version): https://www.ffiec.gov/cra/pdf/2015_CRA_Guide.pdf
Can I use proof of disclosing the Closing Disclosure to the borrower from the Title Company, or does the proof have to be from us the Lender?
As far as specific evidence of delivery for the Closing Disclosure, Reg. Z doesn't specifically require any one type of evidence. The Bank, however, would want to have documentation showing that it complied with TRID's delivery/timing requirements. Additionally, the regulation does permit settlement agents to provide the CD. Ultimately, however, the creditor remains responsible for ensuring compliance with applicable regulatory provisions.
(1) Provision of disclosures --
(i) Scope. In a transaction subject to paragraph (e)(1)(i) of this section, the creditor shall provide the consumer with the disclosures required under § 1026.38 reflecting the actual terms of the transaction.
(iii) Receipt of disclosures. If any disclosures required under paragraph (f)(1)(i) of this section are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail.
12 CFR 1026.19(f)(1)(iii): https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/19/#f-1-iii
(v) Settlement agent. A settlement agent may provide a consumer with the disclosures required under paragraph (f)(1)(i) of this section, provided the settlement agent complies with all relevant requirements of this paragraph (f). The creditor shall ensure that such disclosures are provided in accordance with all requirements of this paragraph (f). Disclosures provided by a settlement agent in accordance with the requirements of this paragraph (f) satisfy the creditor's obligation under this paragraph (f).
12 CFR 1026.19(f)(1)(v)(i): https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/19/#f-1-v
We have a few questions about mortgage payments. Our core is set up so that mortgage payments are applied in the following order:
1. The monthly escrow is put into the escrow account.
2. The remainder is applied to interest.
3. If anything remains after interest is paid, it is put toward the principle.
Are we allowed to apply mortgage payments this way? Is there anything in regulation that dictates how to apply mortgage payments?
There is not a prohibition in doing that under the federal regulations. It would be up to the bank's loan agreement regarding how payments are applied. As long as the bank's loan agreement does not state otherwise, there should not be an issue with applying payments in that way.
We do business in a state with dower rights. I just want to make sure that a spouse who is not on the title to real estate but uses the home as a primary residence does not receive the right to rescind—is this correct?
That is correct. For purposes of the rescission rules, dower does not constitute an ownership interest.
An ownership interest does not include, for example, leaseholds or inchoate rights, such as dower.
Comment 2 to §1026.2(a)(11): https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/2/#2-a-11-Interp-2
We have a loan application which will be secured by our borrowers’ primary residence. It will additionally be secured by 40 acres of agricultural real estate that is owned by one of the borrowers’ father. My question is, do I have to provide a copy of the Loan Estimate to the father who is only pledging security?
There is not a requirement to give a copy of the Loan Estimate to the father in this case, under the TRID requirements. If the loan is subject to the right of rescission, the bank would need to give a Closing Disclosure to anyone with the right to rescind though, which may include the father. As always, be sure to check any internal policy requirements or investor guidelines, if applicable, since these often include additional disclosure requirements.
…When two consumers are joint obligors with primary liability on an obligation, the early disclosures required by § 1026.19(a), (e), or (g), as applicable, may be provided to any one of them. In rescindable transactions, the disclosures required by § 1026.19(f) must be given separately to each consumer who has the right to rescind under § 1026.23. In transactions that are not rescindable, the disclosures required by § 1026.19(f) may be provided to any consumer with primary liability on the obligation. …
We send disclosures electronically and can be notified when the borrower has not accessed them by the Loan Estimate (LE) due date. Are we required to mail the disclosures on that day if the borrower hasn’t accessed the electronic docs? They are telling us they are having a problem once we are past the LE due date so we are mailing them then but it is past the due date. If our system logs that we sent it by the due date and the borrower had e-consented, are we okay?
The customer is considered to have received the LE three business days after the bank sends it, even if the customer has not opened it. There is not a regulatory requirement to then send the disclosures in paper form as well. However, doing so may be required under the bank's internal policy, or an investor's guidelines (if applicable).
2. Electronic delivery. The three-business-day period provided in § 1026.19(e)(1)(iv) applies to methods of electronic delivery, such as email. For example, if a creditor sends the disclosures required under § 1026.19(e) via email on Monday, pursuant to § 1026.19(e)(1)(iv) the consumer is considered to have received the disclosures on Thursday, three business days later.
Is an "assumed" loan HMDA reportable? There was only one borrower when the loan was originated (not this year) and the loan was reported in that year. The Bank has now allowed another borrower to assume the note from the original borrower.
Yes, it would be when the bank enters into a written agreement accepting a new borrower in place of an existing borrower, even if the bank does not create a new obligation.
i. Assumptions. For purposes of Regulation C, an assumption is a transaction in which an institution enters into a written agreement accepting a new borrower in place of an existing borrower as the obligor on an existing debt obligation. For purposes of Regulation C, assumptions include successor-in-interest transactions, in which an individual succeeds the prior owner as the property owner and then assumes the existing debt secured by the property. Under § 1003.2(d), assumptions are extensions of credit even if the new borrower merely assumes the existing debt obligation and no new debt obligation is created. See also comment 2(j)-5.
Comment 2 to §1003.2(d)(2)(i): https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1003/Interp-2/#2-d-Interp-2-i
First, the HMDA Rule maintains Regulation C’s coverage of loan assumptions, even if no new debt obligation is created. A loan assumption is a transaction in which a Financial Institution enters into a written agreement accepting a new borrower in place of an existing borrower as the obligor on an existing debt obligation. The HMDA Rule clarifies that, under Regulation C, assumptions include successor-in-interest transactions in which an individual succeeds the prior owner as the property owner and then assumes the existing debt secured by the property. Assumptions are extensions of credit under the HMDA Rule even if the new borrower merely assumes the existing debt obligation and no new debt obligation is created. Comment 2(d)-2.i.
HMDA Small Entity Compliance Guide, p. 32: https://files.consumerfinance.gov/f/documents/cfpb_2018-hmda_small-entity-compliance-guide_stickered.pdf
Can you clarify all of the documents that the Board of Directors is required to review prior to approving the BSA/AML Policy? Does the BOD need to review the Policy, Risk Assessment and Procedures as a total program review?
Because procedures and policies are components of the BSA/AML compliance program, conservatively, the Board of Directors should be approving both of them. Additionally, even though it is not explicitly required, because of how broad the requirement is and in the spirit of keeping the board informed, we have members who also obtain board approval for the risk assessment component.
(b) Establishment of BSA compliance program—(1) Program requirement. Each bank shall develop and provide for the continued administration of a program reasonably designed to ensure and monitor compliance with the recordkeeping and reporting requirements set forth in subchapter II of chapter 53 of title 31, United States Code, the Bank Secrecy Act, and the implementing regulations promulgated thereunder by the Department of the Treasury at 31 CFR part 103. The compliance program shall be reduced to writing, approved by the board of directors, and noted in the minutes.
§ 208.63: https://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&sid=512f235ab20bd5823c2a3d1bfdb1c168&rgn=div8&view=text&node=12:184.108.40.206.220.127.116.11&idno=12
The BSA/AML compliance program must be written, approved by the board of directors, and noted in the board minutes. A bank must have a BSA/AML compliance program commensurate with its respective BSA/AML risk profile. Refer to the core overview section, "BSA/AML Risk Assessment," page 18, for additional guidance on developing a BSA/AML risk assessment. Refer to Appendix I (“Risk Assessment Link to the BSA/AML Compliance Program") for a chart depicting the risk assessment’s link to the BSA/AML compliance program. Furthermore, the BSA/AML compliance program must be fully implemented and reasonably designed to meet the BSA requirements.32 Policy statements alone are not sufficient; practices must coincide with the bank’s written policies, procedures, and processes. The BSA/AML compliance program must provide for the following minimum requirements:
· A system of internal controls to ensure ongoing compliance.
· Independent testing of BSA/AML compliance.
· Designate an individual or individuals responsible for managing BSA compliance (BSA compliance officer).
· Training for appropriate personnel.
BSA/AML Manual: https://www.compliancealliance.com/find-a-tool/tool/regulatory-policy-and-training-requirements
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