ABA Banking Journal 5/08 - (Page 50) Compliance Clinic MIB X AL O If HMDA doesn’t cover you, don’t cover HMDA If our bank is not subject to the Home Mortgage Disclosure Act and we do not gather this data, do we need to post the HMDA Notice? No. That obligation is based on the same definition that determines whether you have an obligation to collect and report HMDA data. See 12 C.F.R. 203.2(e) (1) of the FFIEC’s HMDA: A Guide to Getting it Right, (http://www.ffiec.gov/hmda/pdf/2007guide.pdf). If you do not fall under any of these criteria, the notice would not be required. Q. A. The Commentary to this section of Reg E states that: “disclosures given by a financial institution earlier than the regulation requires (for example, when the consumer opens a checking account) need not be repeated when the consumer later enters into an agreement with a third party to initiate preauthorized transfers to or from the consumer’s account, unless the terms and conditions differ from those that the institution previously disclosed. On the other hand, if an agreement for EFT services to be provided by an account-holding institution is directly between the consumer and the account-holding institution, disclosures must be given in close proximity to the event requiring disclosure, for example, when the consumer contracts for a new service.” In this case, turn off the photocopier If we have a commercial loan that is secured by a 30unit apartment complex where there are three buildings that contain ten units each, are we required to give the notice of right to receive a copy of the appraisal? Refer to §202.14 regarding the rules on providing appraisal reports: “(a) Providing appraisals. A creditor shall provide a copy of an appraisal report used in connection with an application for credit that is to be secured by a lien on a dwelling For purposes of paragraph (a) of this section, the term dwelling means a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes, but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home.” Based on the information you provided, it does not appear that a copy of the appraisal is required by Reg B. Please ensure, however, that it is not required by your state law. Q. Resolutions versus signature cards Does a resolution supersede the signature card? If we have new resolutions when organizations change officers year to year, will a resolution alone be okay or do we need a new signature card? You should consult with legal counsel in your state if you want to treat the resolution as if it were a modification to the original signature card. Although most banks require both a resolution and a signature card, you need to consider that a resolution and a signature card are two different things and serve two different purposes. A corporate resolution is a legal document defining which individuals are authorized to act on behalf of a corporation. You need to know this when establishing an account. Just because the board of a company passes a resolution to make Joe Smith an officer of the corporation, this does not necessarily mean that Joe is authorized to sign on behalf of the corporation on the bank account held at your bank. A signature card is a form, executed by an account holder, establishing account ownership and setting forth some of the basic terms of the account and provisions of the deposit contract. In addition, a signature card is your bank’s contract with its customer, while the corporate resolution is the corporation’s own document. Q. A. A. Can you make “before the fact” EFT disclosures? We routinely give the EFT disclosure at account opening, even if the consumer does not get a debit/ATM card at that time. Would we be required to give them the EFT disclosures again when and if they decide at a later date to have a debit/ATM card? This is assuming that nothing has changed on the disclosure. According to Reg E §205.7,a financial institution shall make the initial disclosures at the time a consumer “contracts” for an electronic fund transfer service or before the first electronic fund transfer is made involving the consumer’s account. Q. A. Locating HELOC variable-rate aid Where can I find guidance for updating the HELOC variable-rate historical data? When and how often do we have to update variable-rate historical data? The variable-rate historical example for HELOCs is found under 226.5b(d) of Regulation Z, specifically .5b(d)(12)(xi). It addresses the 15-year historical example chart required in the “early disclosures” for HELOCs. The Commentary for .5b(d)(12)(xi) provides guidance on updating the charts and disclosures. In general, it must be updated annually, roughly around the same date or time period (e.g. first Friday in January), and use a rate in effect within the previous six months from the date of the disclosure. This section applies primarily to the disclosures to be provided on or with an application. Leslie Callaway, CRCM, and Mark Kruhm, CRCM, ABA compliance analysts, and other ABA experts, answer ABA member questions here. Submit questions to compmail@aba.com. Disclaimer: Our answers do not provide, nor are they intended to substitute for, professional legal advice. Q. A. 50 MAY 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com http://www.ffiec.gov/hmda/pdf/2007guide.pdf http://www.ababj.com
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