Are past due notices REQUIRED for all consumer loan types, or just mortgage loans? Is it just the 45-day HUD notice that is required, or is a general past due notice required? At what point are they required (10, 30, 45, 90, etc.)?

Past due notices are a State law issue (outside of the HUD and SCRA notice), if anywhere.

Most banks give their notice of negative information on the past due notice. Now, this is not required as long as it is given to the customer. Just a thought.

Regardless of legal requirements, past due notices are a control to manage delinquencies. What industry does not send past due notices for late payments?

I would have to say that the bank I work at sends them out when they remember to.

We're a small bank, so we don't send past due notices. We actually call our past due customers. We give the Notice of Negative Information (Pre-sharing)at loan closing.

A call is fine in many situations...it is the follow up that is important.

If the officer realizes that they are past due, they will call them. Other than that, past dues hardly ever get sent out. It's just something that gets pushed aside.

That is something that will become important to a bank when delinquencies start to increase.

You're exactly right. I hope we get some strict auditers so they will clean up this mess...Good thing I'm already looking for another job!

Apparently you are not a SOX or FDICIA bank.

rlcarey, we are FDIC.

I meant if you were subject to SOX or the FDICIA requirements which require actual assessments and testing of internal controls. Processing of past due accounts on a "if we have time" would never pass muster.

To be honest, I really have no idea about that....

Are there any states that require a past due notice?

Generally the cost of sending a 10-day reminder is less expensive than calling and calling until you reach the borrower. That time can be spent on more important issues.

This discussion can go hand in hand with the need to send NSF notices. "That's the way we've always done it" is not a valid argument on either of these, in most cases. It is more CYA and cost effective than required. And if it isn't required "in writing" why not go electronic? E-Sign isn't required.

Independent mailing of past due notices is typically part of an institutions fraud prevention and detection program. The originating loan officer should not manage this process.