ABA Banking Journal - August 2011 - (Page 46)

ABA COMPLIANCE CENTER | InBOx Special Edition: Compliance Then and Now The ABA Compliance Center staff recently decided to look back at how the answers to some common questions have evolved in a relatively short time—just few years.Y ou’ll find the results interesting. But just make sure you follow the latest answers in complying! Brewing up a solution to a premium blend Q. My bank is giving a coffee pot to anyone opening a money market account with $25,000. The value of the coffee pot is $50 and the shipping, warehousing, tax, and packaging costs come to $5 per pot. Does the bank give the customer a 1099 for $50 or for $55? 2006 response A. According to Federal Reserve Regulation Q, a premium on a deposit must be calculated using, “The value of the premium or, in the case, of articles of merchandise, the total cost (including taxes, shipping, warehousing, packaging, and handling costs)...” This total amount must be reported on a 1099, not just the cost of the actual premium alone. Therefore, your 1099 should be for $55. July 2011 response estimate. Providing the GFE is triggered by taking the application, and you meet the intent of the law by sending the first one within the time period required by the Real Estate Settlement Procedures Act. Sending a second GFE after the three-day period is not a regulatory issue: It is not required and is the result of a change in circumstances beyond the application trigger. Changed circumstances, even changes in fees, do not trigger a new requirement for a GFE. That being said, your HUD-1 must reflect the final fee and cost information. Nevertheless, failure to provide an updated GFE under circumstances where changes are significant could raise examiner eyebrows if there is a pattern of under-disclosures of fees that consistently appear on the HUD-1. Additionally, if the closing costs will change significantly, providing a second GFE is just good customer service. Think of it as if you were the borrower: You would not want to be “surprised” at the closing table by fees that had changed substantially from what you were told to expect. Sometimes it is just the right thing to do. July 2011 response centage of the loan amount as an origination charge, then a revised GFE would be required in order to increase the amount of this fee. Otherwise, the original dollar amount of the origination fee could not increase. CTR exemptions for local government? Q. Our bank is beginning a banking relationship with a local government agency. The agency qualifies for a Phase I exemption from currency transaction reports (CTRs). Does that mean that we have to wait until the agency conducts cash transactions for over $10,000 before it can be exempted? Or can the bank file an exemption form the same day we establish the relationship? 2008 response A. According to the information on Phase I CTR exemptions (31 C.F.R. 103.22(d)(2)(i)-(v)) any bank that wishes to designate a customer as an exempt person must file A. The answer is still the same except the answer is now based on IRS regulations and not Reg Q— which has been withdrawn. Good Faith Estimates and revised loan amounts Q. If a customer applies for a mortgage loan, and we send all the required early disclosures, and then the customer changes the loan amount requested, thus causing an increase in fees and charges, should we send the customer another Good Faith Estimate (GFE)? 2007 response A. There is no requirement to redisclose the GFE, as it is just that—an A. RESPA guidance indicates the only time a revised GFE is required is when the borrower and lender agree to lock the interest rate (see Question #19 under GFE—General of the RESPA FAQs at http:// tinyurl.com/respafaqs). In all other situations a revised GFE is permitted as long as there is a valid “changed circumstance.” A borrower-requested change, such as an increase in the loan amount requested, is generally considered a valid “changed circumstance.” Additionally, please remember that a revised GFE would be required in order to increase certain estimated fees. For example, if the institution charged a fixed per- Leslie Callaway, CRCM, ABA Compliance Project Manager, and Mark Kruhm, CRCM, ABA Senior Compliance Analyst, and other ABA experts, answer ABA member questions here and in the online edition of Inbox at ababj.com. Member banks may submit questions to: compliance@aba. com. Disclaimer: Our answers do not provide, nor are they intended to substitute for, professional legal advice. Answers were current as of date shown at the end of each item. 46  |  ABA BANKING JOURNAL  |  AUGUST  2011 http://portal.hud.gov/hudportal/documents/huddoc?id=resparulefaqs422010.pdf http://portal.hud.gov/hudportal/documents/huddoc?id=resparulefaqs422010.pdf http://www.ababj.com

Table of Contents for the Digital Edition of ABA Banking Journal - August 2011

ABA Banking Journal - August 2011
Content
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking
Pass the Aspirin
Tech Topics
Cover Report: Branch Banking
Branch Design Portfolio
Will Local Players Win Reverse Mortgage Turf?
Compliance Clinic
Compliance Inbox
ABA Resources
Legal Issues
First Person

ABA Banking Journal - August 2011

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