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In Response To:
Thread Starter: Compliance NABW
Title: Re: Prohibition against requiring loan payment via ACH

As is mentioned in this part of the Regulation, "except for credit extended under an overdraft credit plan or extended to maintain a specified minimum balance in the consumer's account." This provides a clear out for overdraft credit plans. There is also further commentary to 1005.10(e) that states:

[2. Overdraft. A financial institution may require the automatic repayment of an overdraft credit plan even if the overdraft extension is charged to an open-end account that may be accessed by the consumer in ways other than by overdrafts.]

This makes it clear that the account as a whole can be accessed in other ways than just the overdraft and the automatic repayment restriction would still not apply. However, I am a bit confused. The way I interpret this is that the auto repayment restriction would not apply to such an account in general, but could still only be used/required in conjunction with amounts associated with overdrafts. Meaning that if credit was accessed through a method other than the overdraft, then those amounts could not require automatic repayment and such amounts would have to be allowed repayment by another method. Do you agree with that, or do you think that all transactions could be required to be subject to auto repayment only?

So, basically, you have a Personal LOC that can be drawn against for overdrafts, but then can also be drawn against through other methods. Can you require auto repayment on any transaction made, or can you only require auto repayment on those amounts that coincide with the "overdraft credit plan" extensions?