Bio:
Lucy is Editor of Compliance Action and President of Compliance Resources, Inc., a company offering compliance support and services to banks. She is also a Senior Associate of Paragon Compliance Group, a company dedicated to providing compliance training. She has more than twenty-five years of experience working with regulatory agencies and financial institutions. Her extensive work experience with regulatory agencies includes the Federal Home Loan Bank Board, the Board of Governors of the Federal Reserve System, and the Federal Trade Commission. As the manager of the Compliance Division of the American Bankers Association, she worked directly with several of the association's banker committees and with regulatory agencies to identify compliance priorities, and to produce resources and programs.
Areas of Expertise:
Compliance Action Newsletter
Compliance Consulting
Compliance Seminars
Training the Trainer Materials
Questions Answered
12/01/2003
Does a Tax Service fee have to be included on the TIL disclosure? In a highly reputable banking compliance publication that shall remain unnamed, I recently read an article entitled "Grossing Up Public Assistance Income". In this article it stated "Under ECOA, while making loan approval decisions, banks must not discriminate against applicants who receive public assistance income. Generally this income is exempt from federal income taxation. If the income is exempt from taxation, then before making a loan approval decision, this exempt income needs to be grossedup to a pretax, taxable incomeequivalent amount." The article goes on to say that a "client bank" was written up for not doing this and the examiners also said that this also needed to be spelled out in the bank's loan policies and procedures manual. I've read every word in my Federal Reserve Manual under Regulation B, to include the commentary, and can find no reference to this. In the past, we have always considered this to be a "gross" income since it was not t axed. I have a HMDA related loan that has an sole income source of Social Security Benefits and need to know what my "gross" income figure is. I would appreciate any assistance that you could give me in light of this new information. Thank you in advance for your help.
12/01/2003
I would like to know your thoughts and/or concerns on credit scoring at the new accounts desk. Meaning, a customer opens a checking or savings account, the bank pulls a credit report to see if the customer would meet a predetermined criteria for crossselling purposes, for example, overdraft protection. In a nut shell, this is prescreening. My initial concern is that the bank does not have a permissable purpose to obtain a credit report, unless the customer is informed and provides written permission. My second thought is if the customer does not meet the predetermined criteria and is not offered a credit product based on information contained in the report, the bank would be required to provide an adverse action notice. Do you see any additional concerns/prohibitions, or know if this type of practice is acceptable?
12/01/2003
Is there any specific Federal regulations regarding forced place insurance? Any required disclosures that need to be sent to the homeowners? If so, which ones and how many? Where can I find more info regardiong the Federal and State requirements?
12/01/2003
Our Regulatory Compliance officer and I are writing the CIP Board Policy. We have 2 different opinions on how the ID section should appear. I do not wish to include detailed info on the types of ID accepted. I think the Board Policy should be generic (ie; govn't issued ID as opposed to Military ID along with another photo ID bearing a description of the person etc.)while the CIP PROCEDURES should show the detail based on each business unit's needs to fullfil their riskbased obligation. Your thoughts?
12/01/2003
With regards to RESPA section 8 kickback provisions: The bank is considering using a third party to track insurance coverage for the life of the loan. New loans will be charged a fee of $65 at closing. The third party is proposing to convert our existing portfolio at $2.50 per loan. The contract also states that the third party is not requiring the bank to use them exclusively for this service, but in practice no other company will be used. Is there any guidance on what constitutes a "reasonable" fee in order to avoid potential section 8 violation of receiving a thing of value in exchange for settlement services?
10/06/2003
Reg B This is regarding the changes in the Uniform Residential Loan Application. Do you know if anyone is taking into account (while changes are being made) the changes that will be put in place by the USA Patriot Act? I am referring to the additional information required to be collected at application to identify the borrower.
09/29/2003
Regarding Regulation B, if we are in a community property state, can we require a spouse’s signature on any related note? Alternatively, are we required to maintain evidence of joint application for loans even when there is no written application, such as a small business loan?
09/29/2003
If a former customer disputes information regarding a paid, closed account, may we pull his credit reports for the purpose of an account review?
09/29/2003
Recently my bank received a FedEx envelope containing a large cashier's check payable to a legitimate bank customer. The alert bank associate who initially received the delivery noticed that the envelope had been sent from Nigeria and further research was done instead of just complying with the request to deposit the cashier's check (which looked like a valid item) to the payee. The bank's customer was called. The customer had sold merchandise over the Internet and was expecting the funds. The check was payable for several thousand dollars more that what was owed, and they were instructed to wire back the extra amountzing. We called the alleged issuing bank of the cashier's check to confirm that the item was indeed fraudulent. Since my bank only accepted delivery of the item and never deposited it, and thus neither the bank nor the customer lost any money, should we file a SAR? Had the envelope been delivered to an unsuspecting associate, I fear the outcome could have been very different. I feel that my bank did have the potential to suffer a loss in excess of $25,000. I would appreciate your advice.
09/29/2003
What is the proper way to handle a situation where you are opening up a new account for a new customer and their name shows up on your OFAC list? Do you continue your opening process and then report them to the proper authorities or do you stop immediately and turn the customer away?
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