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#7826 - 12/14/01 05:21 AM Reg B: Overdraft line of credit
LoisLane Offline
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When closing an account with an overdraft line of credit, is an adverse action form required? 202.9 states it is required when taking adverse action on an existing account, but the Adverse Action definition excludes action in connection with delinquency of an account. And...what if the overdraft line is closed for a reason other than delinquency?
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#7827 - 12/14/01 05:59 AM Re: Reg B: Overdraft line of credit
Andy_Z Offline
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Yes it would apply if this is a bona fide LOC. In the definition of adverse action, "B" states, "(ii) a termination of an account or an unfavorable change in the terms of an account that does not affect all or a substantial portion of a class of the creditor's accounts..."


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#7828 - 06/07/03 06:23 PM Re: Reg B: Overdraft line of credit
Anonymous
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You'll notice that the date of the original question and response are somewhat dated, but in doing research on this issue I have become confused. If I truely have an overdraft line of credit, it becomes delinquent, and the bank decides to close it, is the AA notice required, or does this not meet the definition? I thought I had read other posts that are contradictory to what is said above....can anyone (Andy?) help make this a little clearer?

Thank you!

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#7829 - 06/08/03 12:20 PM Re: Reg B: Overdraft line of credit
Andy_Z Offline
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I believe the keys to this are in the definition of adverse action. And if you take adverse action, when a notice is needed.

(c) Adverse action. (1) The term means:

(ii) A termination of an account or an unfavorable change in the terms of an account that does not affect all or a substantial portion of a class of the creditor’s accounts;


So this tells you canceling an account is adverse action. But-

(2) The term does not include: (ii) Any action or forbearance relating to an account taken in connection with inactivity, default, or delinquency as to that account;

tells you that canceling the account under some circumstances is not adverse action.

Termination because of a problem on another account with you or someone else is one thing, but a payment problem on this account is another.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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