ABA Banking Journal - November 2010 - (Page 39)

ABA COMPLIANCE CENTER | InBOx Does ACH credit to passbook trigger statement? Q. We offer passbook savings to our customers. Our bank does not allow automated clearinghouse debits to be made from these accounts, but we do allow ACH credits. If a passbook savings account receives an ACH credit, does that trigger a need to generate a statement? A. There is no requirement to provide statements on such accounts when they may only be accessed electronically by preauthorized transfers, such an ACH credit. See Regulation E Section 205.9(c) (1)(i), which states: “(c) Exceptions to the periodic statement requirement for certain accounts — (1) Preauthorized transfers to accounts. For accounts that may be accessed only by preauthorized transfers to the account the following rules apply: “(i) Passbook accounts. For passbook accounts, the financial institution need not provide a periodic statement if the institution updates the passbook upon presentation or enters on a separate document the amount and date of each electronic fund transfer since the passbook was last presented.” The Official Staff Commentary to this section states: “Periodic statements limited to EFT activity. A financial institution that uses a passbook as the primary means for displaying account activity, but also allows the account to be debited electronically, may provide a periodic statement requirement that reflects only the EFTs and other required disclosures (such as charges, account balances, and address and telephone number for inquiries).” [Emphasis added] This should be disclosed as part of your Reg E initial disclosures as follows: “Passbook account where the only possible electronic fund transfers are preauthorized credits. If you bring your passbook to us, we will record any electronic deposits that were made to your account since the last time you brought in your passbook.” In addition, you may use any reasonable means to provide a telephone number to consumers with passbook accounts that can only be accessed by preauthorized credits and that do not receive periodic statements. For example, you may print the telephone number in the passbook, or include the number with the annual error resolution notice (which still must be provided to passbook customers.) (Response provided 5/11/2010) Handling Reg B’s 30-day rule Q. With the renewed focus on Regulation B, I am concerned about how timing is addressed for mortgage applications. It’s not unusual for underwriting to take longer than 30 days. How do we defend ourselves for not making a decision and sending notice within 30 days? A. Regulation B does not differentiate between mortgage applications or any other type of loan application. What the regulation states is that the bank must take some kind of action on a completed application within 30 days. “Action” can mean declining the request; sending a notice of incompleteness; or approving the request. Communicating to the applicant that additional information is needed is action. The reg does not dictate the processing time for the loan. In those instances in which it takes more than 30 days to underwrite a mortgage transaction, what is required is that the bank communicates the status of the application within 30 days. (It can’t just say “We’re working on it and we’ll let you know.” ) The bank may meet the Reg B notification requirements by communicating a denial, an approval, or that additional information is required. Once you communicate, the 30-day clock stops, unless you decide to decline due to failure to provide information. (Response provided 6/25/2010) A different CRA question Q. Would a deposit reporting bureau such as ChexSystems be considered a Consumer Reporting Agency (CRA) under the Fair Credit Reporting Act for purposes of including this in the scope of our procedures for the FACT Act/FCRA Accuracy and Integrity Rules? A. The FCRA/FACT Act in some places states that a consumer reporting agency includes the three nationwide consumer reporting agencies (Equifax, Trans Union, and Experian) and in other places states that an agency also includes the “specialty” providers, such ChexSystems. For purposes of accuracy and integrity as well as direct disputes, FCRA/ FACTA uses the broader definition of the term “CRA,” which includes ChexSystems and other specialty agencies. ChexSystems was already considered an agency for purposes of adverse action. (Response provided 6/25/2010) 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. november 2010 | ABA BANKING JOURNAL | 39 http://www.ababj.com/blog/461.html

Table of Contents for the Digital Edition of ABA Banking Journal - November 2010

ABA Banking Journal - November 2010
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking: Chapter 12’s Bad Fit
Pass the Aspirin
Tech Topics
Capital Squeeze
Basel III Redefines Capital
Compliance Clinic
Compliance Inbox
ABA Resources
Investment Management
Surveys & Trends
First Person

ABA Banking Journal - November 2010

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