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Loan "Skipa Payment" Plans

Our bank is planning a "skipapayment" program for our loan customers around tax time. What are the compliance concerns involved in this?

Answer by Andy Zavoina, BOL Guru
If you will be collecting the interest owed, it must be calculated according to your state's law as it pertains to that loan type. You must also be aware that while the loan maturity may be delayed onemonth per extension, any credit insurance may not be and will terminate based on the original schedule.


Answer by Lucy Griffin, BOL Guru
First, think about fair lending. Make sure you are offering the program to customers or on products that will not have a discriminatory impact. Don't offer this program only to highend customers. If you limit the customers to whom you offer this option, make sure you have a solid business reason for the limitations.

If the product is openend, you need to adjust your monthly statement and APR calculations to be sure they are accurate. If the loan is closedend, this is an option that you offer postclosing and it would not trigger new or adjusted disclosures. But watch out if the loan is an adjustable rate mortgage because the amortization schedule will be affected and you will need to take this into account at the next rate adjustment.

Prepare the reporters of credit so that these accounts are not reported as late. You'll need a system to track these accounts so that credit reporting is accurate.

If any affected loans are paid by preauthorized funds transfer, make sure you can suspend the payment at the customers request before you offer to do it.

First published on 2/5/01

First published on 02/05/2001

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