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#1360589 - 03/19/10 01:41 PM
Re: Payment cut-off before 5:00
Reed
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Power Poster
Joined: Aug 2001
Posts: 7,351
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Our cut-off for in-person payments is 3PM....the close of our business day.
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The more you sweat in training, the less you bleed in battle.......
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#1360596 - 03/19/10 01:46 PM
Re: Payment cut-off before 5:00
swiggles
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Platinum Poster
Joined: Feb 2010
Posts: 960
Illinois
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You may cut off at your normal close of business for the bank.
"A card issuer that is a financial institution shall not impose a cut-off time earlier than the close of business for any such payments made in person at any branch or office of the card issuer at which such payments are accepted. Notwithstanding ยง 226.10(b)(2)(ii), a card issuer may impose a cut-off time earlier than 5 p.m. for such payments, if the close of business of the branch or office is earlier than 5 p.m. "
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#1360783 - 03/19/10 03:25 PM
Re: Payment cut-off before 5:00
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Power Poster
Joined: Aug 2002
Posts: 3,094
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The exception to the 5pm is for: *in-person pmts *at a branch or office of the bank *for cr cards.
Section 226.10(b)(3) allows the cutoff to be as of the close of business.
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#1360912 - 03/19/10 04:41 PM
Re: Payment cut-off before 5:00
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100 Club
Joined: Feb 2010
Posts: 121
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We are giving the customer a Cediting of Payments Disclosure at loan closing. This basically says how, when, where, and at what time payments must be received.
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#1362669 - 03/23/10 09:15 PM
Re: Payment cut-off before 5:00
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Diamond Poster
Joined: Dec 2008
Posts: 1,268
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We changed our disclosure to read 5 p.m.
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#1364200 - 03/25/10 07:23 PM
Re: Payment cut-off before 5:00
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Gold Star
Joined: Nov 2004
Posts: 313
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We also changed our P&P to credit open-ended payments as of the date the payment was made. While our end of day cut-off time is 4:00, we now flag these transactions at the teller line and back-date any open-end payments made between 4:00 and close of business so that the consumer receives credit as of the DATE they made the payment. While the regulation only requires we handle items received between 4-5PM, we chose to include everything taken after end of business day and close of business.
We've changed our disclosures for all new customers to accurately reflect the cut-off time, but do we also need to give notice of these extended hours to existing customers since it's to the customer's benefit? What's the timeline required - I didn't see it in RegZ, could someone point me to the correct reference?? Thanks!
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#1364908 - 03/26/10 06:03 PM
Re: Payment cut-off before 5:00
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Power Poster
Joined: Aug 2001
Posts: 7,351
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We are going to stay with our 3PM cut-off time for in person. Our customers are notified of this. Mail processed next day gets prior day's posting. I'll wait for examiner criticism.
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The more you sweat in training, the less you bleed in battle.......
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#1365261 - 03/29/10 01:04 PM
Re: Payment cut-off before 5:00
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Gold Star
Joined: Nov 2004
Posts: 313
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trout22, From my reading of the regulation I'm thinking that unless you specify a 5:00 cut-off time, your assumed cut-off is the time the bank closes (see OSC 226.10(b)4 on page 7887).
I'm also not seeing anything in the regulation about notification requirements, but I'm thinking either a prominent notice in the lobby, website, and phone banking or a statement message or statement stuffer for existing customers would make sense--Otherwise, how can you say you "specified" an earlier than closing cut-off?
Just a note, from reading 226.10(b)(3)and the analysis on page 7708, I don't think you can even have a 5:00 cut-off for in-person payments on credit card accounts if the bank is open later than 5:00. The example in the reg states that if a bank closes earlier than 5:00 the cut-off can be when they close. The example in the analysis is opposite--if a bank is open later than 5:00 it has to accept in person credit card account payments until closing.
P.S. I got an email from our state bankers association yesterday and their take is that a bank can't have a cut-off time earlier than 5:00 and this doen't just apply to credit cards. Right, we are Fed regulated and confirmed the same with them as well back in early Feb. We are operating on the principle that you may not have a cut-off time earlier than 5:00 on any open-ended credit. Maybe I wasn't clear in the previous post... While our end of day will remain at 4:00, we have extended our 'cut-off' times on all Reg Z open-ended credit to now incorporate the full business day, so up until 6:00 when the bank closes we will process open-end payments on the same date in order to be in compliance with this regulation. My problem is, up until February, we disclosed that our cut-off time for all loan payments was 4:00 (at EOD). It was standard verbiage in our loan docs. So since we've expanded our cut-off time - or basically removed a cut-off time for this particular type of payment, and it's in the customer's benefit, would we need to disclose this change to all customers? It's a cut-off time now 2 hours LATER than what their docs specified... If so, I wasn't able to find this requirement in Reg Z (should I look elsewhere?) so I'm unsure of the timeline and exactly what is required. A statement message would be my preferred method, and our process to date, but not all of our LOC customers receive statements when the account has no activity, so I'm worried that a portion of the customer's affected would not receive notice if I go this route. Before I do a mass mailing, just wanted to make sure it was required...
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#1365476 - 03/29/10 04:58 PM
Re: Payment cut-off before 5:00
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Gold Star
Joined: Nov 2004
Posts: 313
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trout22, IMHO, you only have to notify customers of the later cut-off time if you are open later than 5:00 but want to have 5:00 as your cut off time. Since you are posting payments up until closing, my opinion is that you are in compliance.
What are you doing about 226.10(d)[payments on non-business days]? That one has me stumped.
And how are you segregating open-end credit payments from the rest of the days work? 226.10(d) - My understanding is that if you post your mail on the next business day you are open, and if you have any sort of a grace period, you are OK. It just says you can't treat it as late when processed the next business day. So if we receive mail on a non-banking day (Saturday or Federal Holiday) we'd post it the next chance we get. Worse case scenario is that the payment would be due on a Sunday, we'd have a Monday holiday, then it would post on Tuesday - which is still well within our grace period before we'd consider it as 'late' so we don't feel like we have any changes to procedures to make to comply. Please advise if anyone feels differently! To answer your last question - manually
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#1456259 - 10/18/10 05:10 PM
Re: Payment cut-off before 5:00
trout22
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100 Club
Joined: Mar 2004
Posts: 223
Minnesota
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I have been so confused by this since it came out. UGH! Our bank doors are open until 6:00 M - F and our deposit cut-off time is 3:00. We recently implemented a branch capture program and once the bugs are worked out we are considering moving our deposit cut-off time until 5:00 - which would help this loan payment cut-off problem considerably.
However, until then, our procedures are to credit any payments received between 3 and 6 to the loan as of the actual date received (by running the check, cash-in, etc through a GL suspense account and crediting the loan payment as a block entry so it can be credited same day). that's all fine and dandy but I just completed some monitoring and of the 16 consumer loans payments received in a five week period between 3 and 6, half of them did not get credited for the date received. They were allowed to run through on the next days work. BIG PROBLEM!
I am now working on corrective action by reversing these payments and getting them posted as of the date received (so the interest calcluaton is accurate). I haven't seen much in the way of instructions for fixing the ones that are wrong. My questions are these:
1) is there room for tolerance here? possibly a diminimus rule where I wouldn't have to fix them?
2) Since the problem is clearly a pattern or practice do you think I should ge back to February to identify and fix any of the accounts that are wrong? I'm guessing the amount of adjustmant is rather small - just interest on the principal portion of the payment and possibly a late charge.
3) can I just do an adjustment to the interest and/or refund any late charge or is it better to reverse the payment that was posted on the wrong date and credit it for the right date - in essence, this will make the small interest adjustment.
Maybe I am over thinking this...as if I didn't have other things to be working on....
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