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#2054639 - 12/17/15 01:51 PM Prime Rate Increase
rlcarey Online
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rlcarey
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Galveston, TX
Just a heads up for all you auditors and compliance persons out there. Since this is the first increase in the prime rate in ten years, I would suggest that someone at your bank take a very close look at all of your variable rate loans and products that are supposedly tied to the prime rate and make absolutely sure any changes have taken place as expected. If you have consumer credit line products tied to prime, pay attention that the rate changes when disclosed (immediately or next cycle) and if you change it mid-cycle, your periodic statements are set up to properly handle such a mid-cycle change (seen that problem a time or two).

You don't want to get caught with your pants down 18 months from now.
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Lending Compliance
#2054695 - 12/17/15 03:43 PM Re: Prime Rate Increase rlcarey
Richard Insley Offline
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Richard Insley
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Toano, VA
Excellent advice, Randy! I'd be surprised if a majority of today's BOL's compliance managers/auditors/etc. had anything to do with this subject 10 years ago.
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#2054761 - 12/17/15 06:41 PM Re: Prime Rate Increase rlcarey
straw Offline
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straw
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Since it has been 10 years I can't remember anything about variable rates. How long do we have to update our website and solicitations to reflect the rate increase?

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#2054786 - 12/17/15 07:43 PM Re: Prime Rate Increase rlcarey
rlcarey Online
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rlcarey
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Depends on the context.
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#2054836 - 12/17/15 09:04 PM Re: Prime Rate Increase rlcarey
fmissle Offline
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Pac NW
Also a reminder that if you have consumer disclosable non-HELOC lines of credit with a floor rate tied to prime, you've got to give the 45 day notice before you can increase the rate.
(that was my first thought when it finally changed)

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#2056308 - 12/30/15 09:37 PM Re: Prime Rate Increase fmissle
WIBanker91 Offline
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Can you tell me where that is ?

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#2056331 - 12/31/15 12:34 PM Re: Prime Rate Increase rlcarey
rlcarey Online
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rlcarey
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Galveston, TX
First read 1026.9(c)(2)(v)(C)

Then read the commentary:

12. Index not under creditor's control. See comment 55(b)(2)–2 for guidance on when an index is deemed to be under a creditor's control.

Then got to comment 55(b)(2)–2.
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#2056352 - 12/31/15 02:54 PM Re: Prime Rate Increase rlcarey
WIBanker91 Offline
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Thank you so much, I was on the right track just didn't get far enough. One last question, if the line is over the threshold does it apply?

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#2056363 - 12/31/15 03:42 PM Re: Prime Rate Increase rlcarey
rlcarey Online
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Over what threshold??
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#2056367 - 12/31/15 04:13 PM Re: Prime Rate Increase rlcarey
WIBanker91 Offline
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The Reg Z threshold of $54600.for credit over the applicable threshold

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#2056372 - 12/31/15 04:35 PM Re: Prime Rate Increase rlcarey
rlcarey Online
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rlcarey
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No.
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#2056374 - 12/31/15 04:37 PM Re: Prime Rate Increase rlcarey
WIBanker91 Offline
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Thanks that helps reduce the number of notices

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