Changing terms of a CD

Posted By: Confused in Compliance

Changing terms of a CD - 10/17/13 02:35 PM

If we decide to change the grace period for a CD that is coming up on maturity, would we need to provide a new CD contract/certificate with the new grace period for the next term or would an advance notice to the customers suffice?
Posted By: rlcarey

Re: Changing terms of a CD - 10/17/13 02:43 PM

See 1030.5 Subsequent disclosures.
Posted By: Confused in Compliance

Re: Changing terms of a CD - 10/17/13 02:51 PM

Yes, I understand that an advance notice will be required. My question is whether or not I have to produce a new CD Certificate with the new grace period, or will the notice suffice for the customer as a change in that particular term. I am worried that I am going to have to produce a new CD Certificate with the new grace period printed on it and that will be a much bigger project than just providing a blanket mailing of a change in terms.

What do you think?
Posted By: rlcarey

Re: Changing terms of a CD - 10/17/13 03:21 PM

A "certificate" is just a piece of paper unless you are issuing negotiable CDs.

Blanket mailing? You normally can only make this change at renewal.
Posted By: Confused in Compliance

Re: Changing terms of a CD - 10/17/13 04:02 PM

Blanket mailing to groups of customers with renewals coming up; grouped by maturity date.
Posted By: BrendaC

Re: Changing terms of a CD - 10/22/13 05:41 PM

Be sure to test your computer system closing processes to make sure all employees are educated on any additional steps needed during your transition period. Many systems automatically calculate penalties and closing amounts based on specific CD parameters. The screens may require manual changes to accommodate your new timelines until all CDs have been renewed under the new terms and the CD parameters updated.

Another option would be to establish new CD type codes with the appropriate new parameters and convert CDs as they mature. Obviously, the renewal notices would document this change.