We disclosed the following fees: annual, over limit, pre-payment, stop payment, return item, late fee.

Considering raising the fees so reviewed Reg Z; do we have to notify the borrower and obtain their acceptance in writing in order to increase fees?

Refer to § 1026.9(c) Subsequent disclosure requirements for reg Z requirements. Your state law may also come into play.

However, IMHO, if the fees were part of your agreement (note), then the agreement would dictate if they can be changed.

Thanks Southern Banker, I referred to the section you detailed but also am reviewing a Q&A on BOL:

Question: Under Annual Fee on our Home Equity Line of Credit Disclosure and Agreement, Laser Pro states: "A nonrefundable Annual Fee of $35.00 will be charged to your account at the following time: annually, on the last business day of the month following the yearly anniversary date." We are considering increasing the annusl fee to $50.00. Can we impose the increase on current customers or only on new loans?


Answer: It's a change in terms that is detrimental to the borrower. Those changes are not allowed under 226.5b unless the borrower expressively agrees to it in writing, nor can you hide it in your agreement that you reserve the right to increase fees. From the Commentary to 226.5b: . . . creditors may not include “boilerplate” language in the agreement stating that they reserve the right to change the fees imposed under the plan . . .

First published on BankersOnline.com 12/06/10

dcl - agreed. If your note says the fee is $50. the only way you can amend the fee is to have the customer agree to it - it cannot be unilaterally upped. (If it is better for the customer, it can be unilaterally decreased however.) What the boilerplate refers to is having something like "these are our fees as of 2011 and we can change them at any time."

I was trying to be brief, but should have continued the last sentence 'subject to the notice requirements'

Got you, thanks for the detail!