In Good Company or Low Hanging Fruit? – A Year in Review

1026.20 - Establishes disclosure requirements regarding post consummation events. If the creditor or servicer cancels the escrow account at the consumer's request, the creditor or servicer shall ensure that the consumer receives the disclosures required by paragraph (e)(2) of this section no later than three (3) business days before the closure of the consumer's escrow account. We noted that providing this disclosure was frequently missed.

1003.4(a) - Describes a financial institution’s obligation to collect data on covered applications and loans. We noted several instances of loans with the purpose of home purchase, home improvement, or refinance not being reported on the LAR, including withdrawn loans. Don’t forget to review commercial loans. Any portion of the loan that is used for home improvement, such as adding a pool to the business owner’s home, is HMDA reportable.

1002.9 - Requires financial institutions to provide notification of action within thirty (30) days of receiving a completed application. We identified issues related to timing and content of adverse action notices, as well as the absence of required notifications on incomplete, non-originated applications.

1002.14(a) - Requires financial institutions to provide a written notice of the right to receive a copy of appraisals within three (3) business days after receiving an application. Reg B does not contain an exception to the notice requirement for applications denied or withdrawn within three (3) business days of application. We noted deficiencies in documenting that the right to receive an appraisal disclosure was provided on both originated and non-originated loans.

1024.3 - Defines that the disclosures required by this part may be provided in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). We noted instances where financial institutions were providing loan documents electronically without the proper E-Sign agreement in place.

339.9 / 208.25(i) / 22.9 / 760.9 - Requires financial institutions to furnish a written notice to the borrower when there is a M.I.R.E. (making, increasing, renewing, extending) event on any loan secured by improved real estate or a mobile home located, or to be located, in a flood hazard area. The notice must be mailed or delivered as soon as feasible in advance of closing and must state: (1) that the property securing the loan is, or will be, located in a flood hazard area; and (2) whether federal disaster relief assistance is available. Written acknowledgement on behalf of the borrower must be received prior to closing. Over the last year, we have noted many M.I.R.E. events in which financial institutions did not retain evidence that the flood notice was provided prior to consummation or provided in a timely manner.

681.2/ 717.90 - Requires a financial institution to implement appropriate procedures for validating and reconciling a customer’s address information when discrepancies are noted if a financial institution establishes a continuing relationship with the consumer and regularly, and in the ordinary course of business, furnishes information to the consumer reporting agency. We’ve noted that financial institutions are not identifying, mitigating, or retaining documentation of mitigation efforts for credit bureau alerts, especially where address discrepancies are concerned.

229.13 - The “Exception Holds” section establishes the circumstances, amounts and timing for which deposits can be held. Our most frequently identified findings include the following:

• Only $225 made available the next business on large deposits when $5,525 should have been made available
• Large new account deposits were not made available by the ninth (9th) business day following the date of deposit
• Deposits to new accounts of existing customers were receiving extended new account holds.

1105.11(c) - Establishes the notification and timing requirements to resolve errors on consumer accounts when an unauthorized electronic transaction or other error is reported. Non-compliance issues included the following:

• Error resolution letters did not include the consumer’s right to request documents the institution relied upon in its investigation
• Required notifications upon debiting a provisionally credited amount were not provided
• Investigations on POS items were not completed timely
• Investigations were delayed until written documentation was received
• Interest and fees resulting from the error were not refunded to consumers