NMP - August 2017 - 28

By Jonathan Foxx

AUGUST 2017 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

28

Record Retention: Evidence of Compliance Under TILA
ompliance
Matters,
presented by
Lenders
Compliance
Group, airs every
Friday at 7:00 a.m. Eastern on
MortgageNewsNetwork.com.
Compliance Matters is brought to
you by Mortgage News Network,
and the program provides
practical advice regarding current
mortgage compliance topics. If
you would like to contribute a
question, please submit it to
Compliance@LendersCompliance
Group.com.

C

Question
We are going paperless, but we
are unsure about retaining
documents under the Truth-inLending Act (TILA), since we
know that regulatory enforcement
requirements may cause us to
hold on to evidence. That goes
along with our concerns about
retaining paper copies, too. You
may have answered a question
like this one before, but we are
still unsure of what evidence we
need to retain to show
compliance. So, we want to know
what is the timeline for retaining
documents beyond the required
time required in case of

regulatory enforcement against
us? Also, must we keep paper
copies as evidence of
compliance?
Answer
This is a complicated question
about regulatory enforcement
parameters, with respect to
record retention. Because you
have framed your question in the
context of TILA, this response
will be narrowed to Regulation Z,
the implementing regulation of
TILA.
Except with respect to
advertising, creditors must retain
evidence of compliance with
Regulation Z for a period of two
years after the date the
disclosures are required to be
made or action is required to be
taken. Enforcement of TILA,
however, may require the creditor
to retain records for longer
periods necessary to carry out
enforcement responsibilities and
administrative actions.
In effect, this means that
administrative agencies
responsible for enforcing a
subject regulation may require
creditors under their jurisdictions
to retain records for a longer
period, if necessary to perform
their enforcement responsibilities.

[12 CFR § 226.25(a)]
As to paper retention, in terms
of adequate evidence of
compliance, actual paper copies
of disclosures or other business
records are not absolutely
necessary to be retained.
Evidence may be retained on
microfilm, microfiche, computer
programs, or by any other
method that reproduces records
accurately.
As a matter of fact, the
creditor needs to retain only
enough information to
reconstruct the required
disclosures or other records. By
way of example, the creditor

does not need to retain each
open-end, periodic statement
for purposes of complying with
record retention of a homeequity plan's periodic
statement, as long as the
specific information on each
statement can be retrieved. In
other words, written
procedures for compliance
with the disclosure
requirements and a sample
periodic statement represent
adequate evidence of
compliance. [12 CFR
Supplement I to 226, Official
Staff Interpretations, §
226.25(a)-2]

Jonathan Foxx, Ph.D., MBA, is the Managing Director of
Lenders Compliance Group, the first and only full-service,
mortgage risk management firm in the United States,
specializing exclusively in outsourced mortgage compliance
and offering a suite of services in residential mortgage
banking for banks and non-banks. Information contained in
this article is not intended to be and is not a source of legal
advice. If you would like to contribute a question, please
submit it to Compliance@LendersComplianceGroup.com.


http://www.MortgageNewsNetwork.com

Table of Contents for the Digital Edition of NMP - August 2017

Contents
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