Is a change of terms required on HELOCS if we have to change the Payment Due Date?

We will most likely put a statement message on our 8-6-09 statements. I believe it only impacts payments due on statements produced AFTER 8-20-09. Someone please tell me if I'm wrong.

I agree that we need to make the change. We will also have to change our ODP agreement to reflect that the payment will come out on the "due date indicated on their periodic statement."

We are changing our parameters to indicate that the due date will be 25 days from the statement cut-off date to allow sufficient time for our vendor to get the statements in the mail.

I received the following letter from Chase for one of my credit cards:

"We are pleased to let you know that we are making changes to your payment due date to give you more time to pay. Beginning with your July or August statement, you will have an additional 5 days to submit your payment.

Our records indicate that you may use some type of automated payment service to send in your monthly payments. Please review your July or August credit card statement for your extended due date and if necessary, make changes to your current payment arrangements with your bill payment service to enable you to take advantage of this additional time......."

I thought this might be helpful.

Okay- I just ran across this because I have been ignoring all the credit card stuff since we don't do them- not good on a Monday morning!!

Just to make sure- if we mail our statements on the 1st and the payment is contractually due the 26th then we are okay and shouldn't have to change anything, right?

Correct.

I am very confused as I think many are. On our lines of credits we do not charge late fees but it does continue to accrue interest. Will this require the 21 day notice of pymt due date?
Also our overdraft privilegdes only have payments due if they are in a repayment plan (when overdrawn and not brought to a positive balance in 30 days). They sign an agreement to repay. Does this require 21 day notice or is it more like a loan agreement?

Our statements drop 15 days prior to the contractual due date and there is a 15 day grace period after the contractual due date and before any late fees are incurred.

I think we're in compliance since it's 30 days prior to the expiration of the grace period.

Is that correct?

I don't think so. You said that your contractual due date is 15 days after the statement date. You must provide 21 days on open-end credit.

I would opine that if interest continues to accrue during that 15 day grace, or it is a period mandated by the state, it will not count towards the 21 days.

So because our grace period allows interest to accrue, based on the replies we would now have to drop the statement around 25th.

For example, statement will now drop on 7/25 instead of 8/1, contractual due date is 8/15, grace period ends 8/30.

Would this scenario be correct?

Ivc ~~

I hear what you are saying. Have you thought about February and leap year? You would need to allow more days.

Yes, I know but I wanted to make sure I got the general understanding.

Also, is it calendar days that we're counting?

Yes, it is calendar days. Also keep in mind that the rule hinges on the "delivery" date, not the statment cut-off date. You may need to add a few days to allow for the statement to be placed in the mail.

OK, Thanks for all your help.

Update. I just looked at our ODP product parameters and learned that we do NOT charge a late fee. Based on this, I do not believe that we need to comply with the 21 day requirement.

The CCA says that creditors will be required to adopt reasonable procedures designed to ensure that periodic statements issued in connection with all Regulation Z-covered open-end accounts are mailed or delivered to consumers not later than 21 days BEFORE THE PAYMENT DUE DATE.

The Periodic Statement Requirements for Non-HELOCS states, "A creditor must provide the DUE DATE for a payment IF A LATE CHARGE OR PENALTY RATE MAY BE IMPOSED.”

My interpretation of this is that since we do not charge a late fee, we are not required to provide a due date. If we aren’t required to provide a due date, then we would not be required to comply with the 21 day requirement.

Is my thinking correct?

Because "delivery date" can be confusing, this is what I found--
"the Board is amending §226.5(b)(2)(ii) to require that creditors adopt reasonable procedures designed to insure that periodic statements are mailed or delivered at least 21 days before the payment due date and the expiration of the grace period." Can not include grace period if interest accrues, so that would mean 21 days from date mailed to "due date".

Another reason that you want to stick with the "date mailed" (and I am assuming delivered here means hand delivered for those banks that still deliver) is because of the way that they came up with the number 21 -- see page 12. They believe 7 days for mailing, 7 days for consumer to review and 7 days for payment to get back to institution.

[/quote] I am assuming delivered here means hand delivered for those banks that still deliver [/quote]


I believe "delivery date" is being used because of internet delivery of bills/statement.

Did you get an answer to this? I think we are in the same boat.

I have been reading this thread and think (ha!)I have a handle on it, but still have a couple of questions that I need to be clear on:

1. We currently mail HELOC statements on the 30th and they are due on the 15th. If I change this to be due the 21st it will not allow enough time (or will it?). If I change the due dates to the 25th is that better and will we be in 'safe-harbor land'?

2. Since we mail statements on 7/30, the change will not go in to effect until we mail our 8/30 statements, correct?

3. Our loan documents need to be changed to reflect the longer period of time (the due date in my question 1), and we do NOT need to disclose this to existing customers because it does not adversely affect them.

????

Yes, I did ~~ just a while ago! I did additional research to find out what happens if the funds are not in the account on the date the statement cuts off. In those cases, the statement DOES indicate a due date. It's the statement date. It also shows an amount due.

I spoke with an attorney here in CA that is considered a specialist in Regulation Z. She said that we need to provide the 21 days regardless.

I actually think it is a good thing. Our customers never know what their payment amount is until AFTER the funds are taken from their account. If I were a consumer, I would want to know what the payment amount was before the payment was deducted.

Glad you were able to get an answer (and resolution to your issues)Dolly. I found out we do charge a late fee on ODPs so I am back to the beginning.

Pacar -
1. I think (and I could be wrong) that you would have to go to the 25th for the safe harbor.
2. I think this will depend on the payment due date. If the due date is August 15th (from a 7/30 mailed statement), I think you are ok. That statement could include "notice" of the upcoming change (I am still trying to figure this part out).
3. Like I said, I am still trying to figure that out. I think you are right it is not adverse, but I am not sure on the notice. Our contract (loan agreement) says changes must be disclosed in writing (no time limit)unless the change affects their interest rate or other charges, then the notice needs to be in writing 30 days before the effective date. I am recommending we put a "notice" on their July statements saying they will be getting more time to pay beginning in August.

Again, I am still trying to figure this out, so maybe someone who has spent more than last night trying to get a grip on this will jump in!

SkiDoo -
Thanks! Nice to know I'm not the only one with new bedtime reading material these days ...!

So, just to clarify, this new "21 day rule" applies to any consumer open-end credit - including:

Overdraft protection lines
Home equity lines of credit
Unsecured personal credit lines

The fact that this comes from the Credit Card Accountability and Responsiblity Act is confusing people as far as what types of loans are covered.

We are going to have to change the payment due date for the customer since the billing statement is attached to their regular account statement. Will we have to send notices to clients notifying them the payment date is changing. The statement is cut different days each month. We cut by first monday, etc.