ABA Banking Journal - July 2008 - (Page 49)

MIB X AL O Financial privacy versus judicial scope Is the Right to Financial Privacy Act applicable to a subpoena in a criminal case involving the United States of America versus a bank customer? Or does the subpoena fall under the “judicial subpoena” category and is therefore subject to the RFPA? The RFPA applies to disclosures of information to the federal government. However, under Section 1113 (Exceptions) the Act states that “(e) Nothing in this title shall apply when financial records are sought by a Government authority under the Federal Rules of Civil or Criminal Procedure or comparable rules of other courts in connection with litigation to which the Government authority and the customer are parties.” [Emphasis added.] Q. A. “Refis” under HMDA’s definition The Home Mortgage Disclosure Act regulation states: “Refinancing means a new obligation that satisfies and replaces an existing obligation by the same borrower, in which, for coverage purposes, the existing obligation is a home purchase loan (as determined by the lender, for example, by reference to available documents; or as stated by the applicant), and both the existing obligation and the new obligation are secured by first liens on dwellings; and for reporting purposes, both the existing obligation and the new obligation are secured by liens on dwellings.” However, another source I read states, “A refinancing is reported whether or not the institution was the original creditor.” Which is correct? A refinancing, for reporting purposes, is defined as “…any dwelling-secured loan that replaces and satisfies another dwelling-secured loan to the same borrower.” While the borrower must be the same, the loan does not have to be by the same creditor. Q. to contact either inside or outside counsel or your state banking association for that information. Be careful: Fees that are waived for some borrowers, but not for others, are a red flag for a possible fair-lending issue. You need to ensure that all fees are fair, consistent, and charged without regard to any prohibited factors or geographic region. In other words, although banks are not prohibited from waiving fees on an occasional basis, you need to ensure that certain fees are not charged only to minority borrowers, or only to borrowers in a specific geographic region (low-to-moderate income, for example) of your assessment area. Also, your disclosures, such as your good faith estimate, must show the fees the borrower is actually expected to pay. If a fee is to be waived or not charged at all, be sure it is reflected properly on the GFE and the HUD-1. In addition, if certain fees are only charged on a case-by-case basis, they may be part of your APR calculation and you need to ensure that your calculations are correct. What’s the fact on OFAC? My CEO is asking where it states that we must conduct an OFAC search. The Office of Foreign Assets Control (OFAC) is an office at the Department of the Treasury that administers and enforces economic and trade sanctions against targeted foreign countries, terrorism sponsoring organizations, and international narcotics traffickers. OFAC’s actions are based on U.S. foreign policy and national security goals. These OFAC sanctions prohibit any dealings with specified countries, entities, and individuals by blocking accounts/property or rejecting transactions. It does not say, necessarily, “how” you must do this. See the OFAC section of the interagency BSA/AML exam manual (starting on page 137), which provides information on developing an OFAC Compliance Program. Another resource would be OFAC’s FAQs–Questions from Financial Institutions (http://www.treas. gov/offices/enforcement/ofac/faq/index.shtml#finance ). Q. A. A. Q. A. “Mandatory fees”? That’s a new one on us I would like to know if there is a banking regulation, state or federal, which states a documentation fee is mandatory on any loan or type of loan. I am only aware of rules if a documentation fee is charged, but apparently it is not charged consistently. We know of no federal regulations mandating fees of any kind. We cannot address state law issues. You may want Leslie Callaway, CRCM, and Mark Kruhm, CRCM, ABA compliance analysts, and other ABA experts, answer member questions here. Submit questions to: compliance@aba.com. Disclaimer: Our answers do not provide, nor are they intended to substitute for, professional legal advice. Handling Visa’s foreign merchant fees There is a new fee from Visa for transactions conducted with foreign merchants in U.S. dollars (e.g., online transactions). Visa began charging banks for this transaction in early April. Although Visa charges the bank separately for this fee, we understand that some banks are bundling this fee along with the transaction, and not reflecting separately on the statement that a fee was charged. How should these fees be disclosed? We asked the Federal Reserve about this, and staff there responded that because this fee is received by the bank as a separate and distinct charge, and is readily identifiable as part of a particular transaction, it should be disclosed as part of the bank’s Regulation DD disclosures and be broken out and identified as a separate fee on the customer’s statement. Q. A. Subscribe at www.ababj.com ABA BANKING JOURNAL/JULY 2008 49 http://www.treas.gov/offices/enforcement/ofac/faq/index.shtml#finance http://www.treas.gov/offices/enforcement/ofac/faq/index.shtml#finance http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - July 2008

ABA Banking Journal - July 2008 Contents Editor’s Column Searching for New Paradigms at BIS Snapshot: C&I Asset Quality 100th Anniversary: Then & Now BofA "Event Concept" Wins Awards, and Customers ABA Resources ABA Chairman’s Position M&A: Beat Today's Market Blues Pass the Aspirin Cover Story: Workout Time Correspondent Banking: No Longer Just a Handshake Business Getting IT Right By Thinking It Through Webnotes Are You "Red Flag" Ready? Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - July 2008

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