Our Loan supervisor checked with our processor and said that there would not be any late charges assessed since Saturday is not a processing day. I don't see how it could not be considered late if a payment is due the 15th and Saturday is the 15th. With the way the rules will read processing that on the 17th would be posted 2 days late. We are regulated by FDIC. We just went through an examination and we knew more about the 10/1 changes than the examiners did that were here. Who did you call?

I would tell your regulator to go back and read the regulation and commentary. There is nothing in it that supports their position. The only cut-off mentioned is payments received by mail and if you have a cut-off before 5pm, it "may" not be considered reasonable. A bank can establish different cut-offs for any other type of payments, as long it is reasonable and is communicated to the customer in writing.

FDIC.

We had that same response/opinion from FDIC and two attorney groups. We have to keep in mind, too, that we are going to have a similar issue later on the credit card side as well.

FlamingoGal - same response as me or what Randy is saying?

Sorry for the lack of clarity - same response as you, SkiDoo.

OK. corretct me if I am wrong (& I probably am). Does the regulation not say that a FI shall not fail to credit a payment to a loan account as of the date of receipt, except when the delay does not result in any charge or negative reporting to a CRA? Would this not be a late payment we are talking about?? Could we not just hold those few that might be late after our cut off time and effective date those payments as of date of receipt and all others pay next business day as disclosed? Especially if this is an amortized loan that pays as of a due date not mater when received (unless late).

Has anyone notified customers of requirements of payments to explain they must be received before cut-off times? If so, do you have any sample language?

Thanks

I'm trying to figure out the same thing. I actually talked to someone at FDIC and he said he thought we were in compliance even though our Saturday is not a business day. He quoted a couple of places in the reg and said that as long as we are not charging penalties or late charges that it wouldn't make a difference if we posted payments received on Saturday as effective Monday. He said the intent of the regulation was not what community banks were doing and that the two days interest accrued from Saturday to Monday would not be considered a penalty as long as we didn't charge a late charge if the due date was on Saturday.

As far as the notice I am going to build it into the note but trying to make sure I have the correct verbiage. So does anyone already have payment posting rules in their notes and would you mind sharing the type of verbiage you have?

Queen Mum from the posts I have read of yours, I think we are in the same boat. Are you notifying existing customers?

According to the rule I think you should, but that would be a major undertaking for us. I can run a report on collateral but that just tells me that it's a 1-4 family. I would have to look at each loan to see if it is primary dwelling.

So my take is...(and the FDIC guy agreed with me) that since we just finished a compliance exam at the end of August it will be awhile before they come back. When they ask how we do the posting of payments, I can show him that it is built into our note and go from there. I am also going to type up the conversation I had with FDIC as my backup argument if they question it further.

Now...does anyone have any verbiage they are willing to share???

Cutoff Time For Receipt of Payments:

Over the counter payments and mailed payments received after 2:00 PM on any business day that the bank is open will be posted on the next business day.

This is language that I am proposing adding to our notes.

What about Saturdays if you are open. You may not consider it a business day for regulatory purposes but the consumer won't know that.


Over the counter payments and mailed payments received after 2:00 PM on any business day, Monday through Friday, that the bank is open will be posted on the next business day. Payments received on Saturday will be posted on the next business day.

What about the following::

All payments will be processed as of the date of receipt according to the following requirements and/or exceptions: (1) Payment is accompanied by correct account number or payment coupon; (2) Payments received on Saturdays or announced bank holidays will be posted the next business day; (3) Payments received by mail should be by check, money order or cashier's check; (4) Payments should be mailed to (Bank name and address); (5) Payments left in the bank night drop are received the following business day when the vault is opened by bank personnel.

It seems like I read somewhere on one of the Reg Z threads today that while the payment posting for 10/1/09 only applied to loans for consumer's principal dwelling, that ALL Reg Z covered loans would be included with a 2010 regulatory compliance change. Does anyone else remember reading this anywhere - can anyone help provide guidance from the reg?

Also, does anyone remember where one of you fabulous posters left us the sample of the written notice you had provided to customers explaining the 'conforming payments'??

Ok, I found the other string where a poster left us their sample verbiage... a big thank you to SkiDoo. This is from the Reg Z - Same Day Credit for Loan Payments topic...

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.