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#1238716 - 08/25/09 06:22 PM Reg Z - Same Day Credit on Loan Payments
cindylou66 Offline
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cindylou66
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Alabama
Okay. I'm in a bit of a fuzz about the requirements coming down on October 1. I read that we have to give credit on the day the payment is received for loans that are secured by a consumer's principal dwelling. Our cutoff time is at 4:00, but we have branches that are open until 7:00. Does anybody else have this dilemma? I'm unsure of how to handle those loan payments made during this 3 hour period. I suggested keeping all loan payments separate and having Loan Ops. backdate them the next morning, but my bank president didn't like this idea. Any suggestions?
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#1238752 - 08/25/09 06:44 PM Re: Reg Z - Same Day Credit on Loan Payments cindylou66
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I attended a seminar last week where it was suggested that we treat all payments received on any given day (regardless of any cut-off times), to have been received that day even if actually posted the following day.....just make the effective date of the payment be the day the payment was actually received (back date).
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#1238764 - 08/25/09 06:51 PM Re: Reg Z - Same Day Credit on Loan Payments swiggles
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Effective dating at our bank will include the loan secretary subtracting one, two, or possibly three days (remember those monday holidays) interest, manually writing up the payments, reversing any late charges, and possibly adjusting the system to keep it from reporting a 30 days past due... if they rolled 30 over the weekend, and manually posting each one. UGGGHHHH! I feel sorry for those who have tellers taking loan payments... I am afraid this can/will turn into an accounting nightmare.

Think about a customer who makes their house and car payment on saturday.... back date and reverse any late charge on the mortgage payment, but then the car payment doesn't get the same treatment... (I would guess there will be a law in the future addressing this)
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#1238773 - 08/25/09 06:56 PM Re: Reg Z - Same Day Credit on Loan Payments PStateBank
cindylou66 Offline
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Alabama
We even talked about doing the same treatment for ALL loan payments. It would be very hard to distinguish which ones are for consumer principal dwellings and which ones are simply first mortgage loans secured by other real estate. And if you're gonna go to this much trouble for one "set" of loans, you might as well just do it for all loan payments taken during that time period between cutoff and closing time.
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#1238782 - 08/25/09 07:04 PM Re: Reg Z - Same Day Credit on Loan Payments cindylou66
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I e-mailed our rep. from our core system to see how they were going to approach the issue. I am going to see what he says. Maybe they are going to create a separate saturday tran code or some other option. Contact your core processor and see what they tell you.
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#1238837 - 08/25/09 07:37 PM Re: Reg Z - Same Day Credit on Loan Payments PStateBank
cindylou66 Offline
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swiggles, so how you would recommend ensuring that all loan payments are backdated? Do as I suggested and keep them separate from all the other teller work and have someone backdate them the next day?
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#1238964 - 08/25/09 09:52 PM Re: Reg Z - Same Day Credit on Loan Payments cindylou66
swiggles Offline
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Originally Posted By: cindylou66
swiggles, so how you would recommend ensuring that all loan payments are backdated? Do as I suggested and keep them separate from all the other teller work and have someone backdate them the next day?


I don't know the legistics of that.....just sayin' it was suggested at the seminar. I don't know if such a thing could be automated or not. And so far, I have not investigated the possibility with those that process payments. We're a big bank and so I don't have my hand into everything. My guess is that it will take a "meeting of the minds" in the Bank's "think tank" (meeting room) grin to iron out how we intend to comply.
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#1241814 - 08/28/09 09:17 PM Re: Reg Z - Same Day Credit on Loan Payments swiggles
Tigg Offline
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*bump*

I was just re-reading the section on payments. Is anyone else gathering from the examples provided that it is ok to set a cut-off time for payments received by mail, but a payment received face to face must be credited on the day it was received (regardless of deposit cutoff times) if the customer may incur a negative result - such as late fee or reporting to the CRA? (It's my understanding that so long as there is no negative result a payment can be credited on the next business day.)

Also - if the lender is going to require payments to be made a certain way and during certain time frames, will it have to be in the promissory note?
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#1241942 - 08/31/09 11:25 AM Re: Reg Z - Same Day Credit on Loan Payments Tigg
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Anyone?

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#1242011 - 08/31/09 02:39 PM Re: Reg Z - Same Day Credit on Loan Payments Tigg
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The servicer has the right to specify, in writing, reasonable requirements for making payments.

Any payment that doesn't comply is deemed nonconforming and must be credited within 5 days of receipt.

The Reg doesn't define 'in writing'. We're going to put a statement on our payoff letters to inform our borrowers of cutoff times.

I'm at a bankers bank so we don't take payments directly from customers. Maybe you could post a sign in your lobby and another at your drive-up?

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#1242147 - 08/31/09 05:17 PM Re: Reg Z - Same Day Credit on Loan Payments Truffle Royale
Tigg Offline
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I'm hoping to get some clarification - I have questions out to other compliance peers - on whether or not you can use the same cut-offs as your funds availability policy.

I am wondering how a separate cut-off for deposits and loans would look to the customer base.

Thanks for your thoughts Truff -- I appreciate it! smile
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#1242196 - 08/31/09 05:56 PM Re: Reg Z - Same Day Credit on Loan Payments Tigg
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Our branches are open on Saturdays but it is not a processing day...Can we put in writing that payments made in person are accepted Mon-Fri...Sat payments will be considered made on Monday?

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#1242256 - 08/31/09 07:10 PM Re: Reg Z - Same Day Credit on Loan Payments Truffle Royale
Ninky Offline
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What are reasonable requirements? That is so subjective. Can we notify each borrower at closing "in writing" that payments made with coupon to the p.o. box listed on their coupon, will be posted the same day. Any received after 5:00 in person or on Saturday, will be posted the next business day. Can this be accomplished by a mailer to our existing customers, and add a disclosure at closing for new customers going forward? It seems like I have read that a lobby sign is not considered "in writing".

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#1242390 - 08/31/09 09:07 PM Re: Reg Z - Same Day Credit on Loan Payments Ninky
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**Bump**

Anyone?

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#1242393 - 08/31/09 09:12 PM Re: Reg Z - Same Day Credit on Loan Payments Ninky
David Dickinson Offline
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Central City, NE
I think your ideas are exactly right - notify all new borrowers (on the note) at closing and notify existing customers with a mailer.
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#1243421 - 09/02/09 02:00 PM Re: Reg Z - Same Day Credit on Loan Payments David Dickinson
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How are banks handling payments on loans that have been demanded or are in foreclosure. We may have a loan that is three months past due that we have demanded - if the consumer sends only one payment and we accept this will start our demand process over. Anyone with any suggestions?

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#1244034 - 09/02/09 08:23 PM Re: Reg Z - Same Day Credit on Loan Payments bstritecky
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I think I have a handle on how to give new customers guidelines on how payments are to be made to coincide with our current cutoff time. If anyone uses a Wolters Kluwer product such as ARTA I called them today and they told me they are not making any adjustments due to this change. I was told I could put additional wording in a loan template under the Additional Terms section or I could do an Addendum. I'm pretty sure they charge if you do an Addendum. My problem is with notifying current customers. I've attended training on this issue given by one of the Bankersonline Guru's and I've got a call into them now. They said in training that you would need to refer to your note to see how you have to notify your customers. Easy enough, but our note doesn’t speak to this issue at all. Does this mean I don't have to notify them? I'm hoping I don't just because I'm going to send them a notice telling him how to make their payment and it's the same as we handle things now and they know that. I'm afraid it's just going to cause more confusion for the customers and if I don't have to do that I would love to avoid it.

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#1244080 - 09/02/09 08:40 PM Re: Reg Z - Same Day Credit on Loan Payments cindylou66
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Missouri
We were, up until a few months ago, manually posting payments made after cut-off and on weekends and effective dating them to the date they were actually made. Due to some computer programs/software changes, we just stopped doing the manually posting and now this Reg Z change comes out!! I called our Senior Review Examiner (we are an FDIC bank)and he told me we would be okay to let them post the next day if they were made after cutoff or weekends as long as we had a notice about our cutoff time posted in the bank where customers could see it. We now have, besides our Funds Availability Notice, a notice telling them any loan payments made after our 3:00 cutoff time or on weekends will be posted the following day. However, if we have a customer complain that a late fee was assessed because the payment was not posted the actual day he made the payment, we will just automatically waive the late fee.

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#1244420 - 09/03/09 02:57 PM Re: Reg Z - Same Day Credit on Loan Payments Farm Girl
Tesla Offline
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Originally Posted By: csnyder
We now have, besides our Funds Availability Notice, a notice telling them any loan payments made after our 3:00 cutoff time or on weekends will be posted the following day. However, if we have a customer complain that a late fee was assessed because the payment was not posted the actual day he made the payment, we will just automatically waive the late fee.


Would you be willing to share your language for this? Did you model it like the Funds Availability Disclosure or make it simpler? (I think that disclosure is so confusing!)
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#1245034 - 09/03/09 08:42 PM Re: Reg Z - Same Day Credit on Loan Payments Tesla
JGo Offline
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I didn't get the answer I was hoping for on the notification of currnet loan customers. Since our note doesn't address it I was told that we would need to get the customer to sign and send back a modification. The other alternative proposed was to send them notice of the payment stipulations and give them a time frame for responding.

The thing I don't like about either option is that you could be handeling customers differently, which is bound to lead to disaster.

I've heard of one bank that is going to in essense going to extened their grace period by a few hours (excluding the whole Saturday deal) and any payments that would apply that are taken after the cutoff time and result in a late fee, that they are going to refund the late fee. I don't know about you but this should keep you in compliance from what I understand; I'm just not sure how easily it can be done. I'll have to check with some people in operations on that one.

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#1246574 - 09/08/09 07:45 PM Re: Reg Z - Same Day Credit on Loan Payments JGo
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Has anyone come up with language for the payment processing yet? Here's my shot at it - please let me know what you think:

Our policy, when you make a payment on your loan, is to give you credit for that payment on the date we receive your payment coupon/statement and source of funds. Our cut off times for loan payments are: (insert cut off times). If you do not have your payment coupon/statement or make your payment after the above cut off time, we will consider your payment as non-conforming. Nonconforming payments will be posted as soon as we are able to identify the loan to which the payment applies (for payments without coupons/statements) or on our next business day or no later than within five business days of receipt. If you make your loan payments by ACH or AFT, your payments are credited upon receipt. For these purposes, Saturdays, Sundays and federal holidays are not business days.

Payments can made in person, at the night depository, by telephone transfer (AFT), ACH or by mail to any of the branches.
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#1247209 - 09/09/09 04:06 PM Re: Reg Z - Same Day Credit on Loan Payments Tesla
Tesla Offline
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Bump? Am I way off here or is no one doing a disclosure/notice to the customers? Help!
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#1248236 - 09/10/09 06:28 PM Re: Reg Z - Same Day Credit on Loan Payments Tesla
JGo Offline
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I believe we've decided to take a different approach. We've found a way to monitor payments that would have not received a late fee or been reported to the CB's as being late, if we had a 5:00 cut off time. 5:00 was used as an example as to what a reasonable time cut off time is.

We are going to reverse fees and/or backdate transactions as needed. We've looked at this for an entire month and didn't have any items that would have needed to of been adjusted.

This should eliminate the need to disclose to your current customers of any changes. Be sure to see your note how to handle this but our note didn't address it at all so to be safe we would have had to do modification agreements for all of them accoring to lending guru. This also eliminates the need to adjust your notes for new customers. I've spoken with our loan originating software company and there is a way to do it but it's just not ideal; that is to add the wording of specifying payment requirements.

I hope this helps.

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#1248265 - 09/10/09 06:59 PM Re: Reg Z - Same Day Credit on Loan Payments JGo
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Thanks! Our Ops Dept didn't think it was possible to back date the transactions without making a lot of work for a lot of people. Interestingly, the note is silent regarding specifics on payments (other than due date and amount).

I guess my thinking was by disclosing the cut off time, etc. it was providing us a little protection under the reg.

I appreciate your comments. smile
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#1248287 - 09/10/09 07:18 PM Re: Reg Z - Same Day Credit on Loan Payments Tesla
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I understand that that approach will stop any late charges. But if you calculate interest on a daily basis, that will not stop you from charging the customer "additional interest" as mentioned in the Crediting of Payments in section 36. How do you plan to address that?
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