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#1923328 - 05/14/14 09:11 PM No periodic statement sent
travelgirl Offline
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Joined: Mar 2004
Posts: 223
Minnesota
While researching an unrelated issue, I recently discovered some customers were not being sent a periodic statement on either a Home Equity Line of Credit (13 loans) or a Personal line of credit (39 loans). The cause appears to be at the time of set-up for those customers wishing to have automatic payment. In the noted cases the wrong code was used.

All of the accounts in question have been fixed and an automated solution has been implemented to avoid any future problems.

My question is this - what else should I or could I do to "cure" the problem. Do I need to figure out how long each customer has not gotten a statement and send one for that time period? I have no idea how I would go about that.

I believe many of the 39 PLOC accounts (non-RE secured) would NOT be exempt from statement requirements because the amounts are less than the exemption thresholds (the amount that started increasing annually in 2011).

Some may be exempt due to no debit and/or credit activity too.

Before I take the next step to determine exactly who should have received one (scrub the list to remove those with no activity and/or amounts under threshold), I wanted to see if there was something I had to cure.
Last edited by travelgirl; 05/14/14 09:50 PM.
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#1923355 - 05/15/14 02:36 AM Re: No periodic statement sent travelgirl
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,268
Galveston, TX
There is no "cure". Move forward.
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#1923364 - 05/15/14 11:41 AM Re: No periodic statement sent travelgirl
Richard Insley Online
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Richard Insley
Joined: Oct 2000
Posts: 10,056
Toano, VA
Failing to send a periodic statement means failing to disclose the APR and FC for these billing cycles. These serial violations have created an unknown amount of civil liability and expose you to enforcement action by your regulator.

While there is no cookie-cutter solution to open-end credit reimbursements, the "Joint Statement of Policy on the Administrative Enforcement of the Truth in Lending Act—Restitution" clearly applies. Since there have been very few open-end credit reimbursement cases since the Policy went into effect in 1980, there's no way to know what remedial action your regulator might order you to take. Because you found this problem, the "Policy" does not apply (yet.)

Section 130(b) of the TILA (15 U.S.C. § 1640(b)) offers a voluntary self-cure, but taking this cure would mean reimbursing 100% of the undisclosed interest for all billing cycles going back 2 years.

For now, taking no action is an option. Should your regulator discover this problem during a future compliance examination and invoke the "Policy", it's hard to imagine how the cure could be worse than 100% of the interest collected without benefit of legal periodic disclosures.
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#1923410 - 05/15/14 01:59 PM Re: No periodic statement sent Richard Insley
travelgirl Offline
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Joined: Mar 2004
Posts: 223
Minnesota
Yikes. Thanks for the feeback RL and Richard.

I am further refining my list by removing those accounts (non-RE secured) whose loan amounts are over the exemption threshold.

The HELOC's in question are less than 5% of our total HELOC portfolio so I'm pretty comfortable doing nothing to "cure" and fixing the problem so it doesn't occur again.

The PLOC's in question are in the double digit percentage - still figuring out the actual number.

My gut is telling me to note the issue, correct it going forward and move on.

In the past I've always been very forthcoming with regulators on any self-identified violations and corrective action. I'm concerned on this one what the response will be if I'm forthcoming and don't "cure" anything. Thoughts?

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#1923437 - 05/15/14 03:28 PM Re: No periodic statement sent travelgirl
fmissle Online
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Joined: Jul 2007
Posts: 989
Pac NW
Would this affect any billing right errors that might come up as well? Since you haven't given them a statement, the clock probably hasn't started on those transactions.

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#2224091 - 10/21/19 09:21 PM Re: No periodic statement sent travelgirl
Compliance NABW Offline
Diamond Poster
Joined: Oct 2015
Posts: 1,597
Who was right on this, Randy or Richard? Lol. My understanding was that a "cure" in terms of monetary restitution under TILA is related to account opening disclosures or closing disclosures. In other words not providing a periodic statement isn't something a creditor would pay out a "cure" for. Yes, it is a violation of 1026.7, and if the borrower litigated the issue there could be a potential for the civil liability provisions to apply, but how did (does) Richard come up with the cure being 100% of undisclosed interest? Where is there any cure provision listed in the Regulation for not providing a periodic statement?

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