FDIC: 1995 - Docket No. FDIC-95-13b


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[¶11,123] In the Matter of Sunniland Bank, Fort Lauderdale, Florida, Docket No. FDIC-95-13b (1-30-95).

Bank to cease and desist from such unsafe or unsound practices as failing to provide adequate supervision over the Bank's affairs; operating in violation of applicable consumer protection and civil rights laws or regulations; operating without comprehensive written compliance programs for consumer and civil rights laws; and failing to provide adequate employee training for consumer and civil rights compliance. (This order was amended and revised pursuant to an amendment letter dated 2-15-96 and a bank directors' resolution dated 3-7-96. See ¶16,080. This order was then terminated by order of the FDIC dated 9-12-97. See ¶16,181.)

   [.1] Violations of Law—Eliminate/Correct
   [.2] Consumer Laws—Compliance Officer Required
   [.3] Consumer Laws—Compliance Program—Minimum Requirements
   [.4] Truth In Lending Act—Loan Files Search
   [.5] Residential Real Estate—Flood Insurance—Loan Files Search
   [.6] Community Reinvestment Act—Compliance—Minimum Requirements
   [.7] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

SUNNILAND BANK
FORT LAUDERDALE, FLORIDA
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-95-13b
Sunniland Bank, Fort Lauderdale, Florida ("Bank"), having been advised of its right to receive a written Notice Of Charges and of Hearing ("NOTICE") detailing unsafe or unsound banking practices and violations of applicable law and regulations alleged to have been committed by the Bank and its right to a hearing regarding such alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with a representative of the Legal Division of the Federal Deposit Insurance Corporation ("FDIC"), dated January 24, 1995, whereby solely for the purpose of this proceeding and without admitting or denying any of the alleged charges of unsafe or unsound banking practices and violations of applicable law and regulations, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.

The FDIC considered the matter and determined that it had reason to believe that the Bank had engaged in unsafe or unsound banking practices and had committed violations of applicable law and regulations.

The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST

IT IS HEREBY ORDERED, that the Bank, its institution-affiliated parties, as such term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns cease and desist from the following unsafe or unsound banking practices and violations of law and regulations:

A. Failing to provide adequate supervision and direction over the Bank's compliance with applicable laws and regulations by the board of directors of the Bank to prevent violations of:

B. Engaging in violations of:

   (i) sections 103.29(a)(1)(i)(E), 103.29(a)(1)(ii) and 103.29(a)(2)(i)(B) of the Financial Recordkeeping Regulation, 31 C.F.R. §§ 103.29(a)(1)(i)(E), 103.29(a)(1)(ii), 103.29(a)(2)(i)(B);
   (ii) sections 226.5b(b), 226.5b(d), 226.5(c), 226.6(a)(1), (a)(2), (a)(3) and (a)(4), 226.6(b), (d) and (e), 226.7(e), 226.15(b), 226.17(c), 226.18(b), (c), (d), (e), (e)(1), (f)(1), (f)(2), (g), (h), (k)(1), (1), (m) and (r), 226.19(a)(1), (b)(1) and (b)(2) and 226.23(b) of Regulation Z, 12 C.F.R. §§ 226.5b(b), 226.5b(d), 226.5(c), 226.6(a)(1), (a)(2), (a)(3) and (a)(4), 226.6(b), (d) and (e), 226.7(e), 226.15(b), 226.17(c), 226.18(b), (c), (d), (e), (e)(1), (f)(1), (f)(2), (g), (h), (k)(1), (l), (m) and (r), 226.19(a)(1), (b)(1) and (b)(2) and 226.23(b);
   (iii) sections 6(a)(1), (2) and (3) of RESPA, 12 U.S.C. §§ 2605(a)(1), (2) and (3);
   (iv) sections 3500.7(a), (c), (d) and (e) and 3500.8(b) of Regulation X, 24 C.F.R. §§ 3500.7(a), (c), (d) and (e) and 3500.8(b);
   (v) sections 202.9(a)(1) and (a)(2), 202.9(b)(1) and 202.12(b)(1) of Regulation B, 12 C.F.R. §§ 202.9(a)(1) and (a)(2), 202.9(b)(1) and 202.12(b)(1);
   (vi) sections 229.13(g), 229.18, 229.19(f) and 229.21(g) of Regulation CC, 12 C.F.R. §§ 229.13(g), 229.18, 229.19(f) and 229.21(g);
   (vii) sections 329.1(b)(3) and 329.2 of the Regulations, 12 C.F.R. §§ 329.1(b)(3) and 329.2;
   (viii) sections 339.3, 339.5 and 339.6 of the Regulations, 12 C.F.R. §§ 339.3, 339.5 and 339.6;
   (ix) sections 338.3(a), 338.7(a)(2)(iii) and 338.7(b) of the Regulations, 12 C.F.R. §§ 338.3(a), 338.7(a)(2)(iii) and 338.7(b);
   (x) sections 345.3(a), 345.4(b)(2), 345.4(f), 345.5(a) and (c) and 345.6 of the Regulations, 12 C.F.R. §§ 345.3(a), 345.4(b)(2), 345.4(f), 345.5(a) and (c) and 345.6;
   (xi) sections 326.8(c)(2) and (c)(4) of the Regulations, 12 C.F.R. §§ 326.8(c)(2) and (c)(4);
   (xii) section 203.4(a) of Regulation C, 12 C.F.R. § 203.4(a); and

(xiii) section 328.3 of the Regulations, 12 C.F.R. § 328.3;

   C. Operating the Bank without adopting and implementing a comprehensive written compliance program designed to assure and monitor the Bank's compliance with all applicable consumer and civil rights laws and regulations;
   D. Operating the Bank without a qualified {{3-31-95 p.C-3926}}compliance officer with the requisite training and experience in administering and managing the Bank's compliance program; and
   E. Failing to provide necessary training on an ongoing basis to all Bank personnel who are assigned and/or perform duties and responsibilities regarding the Bank's compliance with all applicable consumer and civil rights laws and regulations.
   IT IS FURTHER ORDERED that the Bank and its successors and assigns take affirmative action as follows:

[.1] 1. Within 30 days from the effective date of this ORDER, the Bank shall take all necessary steps, consistent with sound banking practices, to eliminate and/or correct all violations of consumer and civil rights laws and regulations committed by the Bank, as described on pages 2 through 2-a-16 and pages 2-b through 3-a-2 of the FDIC's Compliance Report of Examination of the Bank as of May 23, 1994. In addition, the Bank shall adopt appropriate procedures to ensure its future compliance with all applicable consumer and civil rights laws and regulations in accordance with the requirements of paragraph 2(b)(i) of this ORDER.

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[.4] 3. (a) Within 90 days of the effective date of this ORDER, the Bank shall conduct a search of its credit files regarding the following "closed-end credits," as that term is defined in Regulation Z: (i) the Bank's files regarding any outstanding closed-end credits extended by the Bank on or after June 13, 1990, the date of the FDIC's immediately preceding compliance examination of the Bank; and (ii) the Bank's files regarding any terminated closed-end credits extended by the Bank on or after May 23, 1992, a date two years prior to the date of the FDIC's current compliance examination of the Bank. The Bank shall search such credit files to determine if any such closed-end credits, in addition to those listed on page 2-b of the FDIC's Compliance Report of Examination of the Bank as of May 23, 1994, contained TILA disclosure violations which understated the finance charge, and thus the annual percentage rate, charged by the Bank, of the type identified on page 2-b of the FDIC's Compliance Report of Examination of the Bank as of May 23, 1994, as a result of a clear and consistent pattern or practice by the Bank, identified during the May 23, 1994 examination, of failing to include as finance charges loan origination fees charged by the Bank on consumer and residential mortgage loans.

(b) Within 120 days of the effective date of this ORDER, and pursuant to and in accordance with the provisions of section 108(e) of the TILA, 15 U.S.C. § 1607(e), and the Federal Financial Institutions Examination Council's joint policy statement entitled "Administrative Enforcement of the Truth In Lending Act — Restitution," 45 Fed. Reg. 48712 (July 21, 1980), effective July 11, 1980, a copy of which is attached hereto as Appendix B, the Bank shall make a monetary adjustment to the accounts of (i) the borrowers identified on page 2-b of the FDIC's Compliance Report of Examination of the Bank as of May 23, 1994, and (ii) all closed-end credit borrowers identified in the file search required by paragraph 3(a) of this ORDER whose closed-end credits contained TILA disclosure violations of the type described in paragraph 3(a). In making such monetary adjustments, the Bank may rely on and be guided by the Table of Reimbursable Violations contained in the FDIC's Compliance Report of Examination of the Bank as of May 23, 1994, regarding the alternative methods and/or amounts of such monetary adjustments.
(c) Within 120 days of the effective date of this ORDER, the Bank shall prepare and submit to the Regional Manager a written report detailing the results of its closed-end credit file search as required by paragraph 3(a) of this ORDER, which report shall include: (i) the number of closed-end credit files searched; (ii) the number and dollar amounts of all closedend extensions of credit requiring a monetary adjustment to the account of the borrower pursuant to the TILA, as identified in paragraph 3(b); (iii) the method and amount of monetary adjustment made by the Bank to the account of the borrower on each closed-end extension of credit listed and described pursuant to paragraph 3(c)(ii), and the calculations supporting {{3-31-95 p.C-3928}}the amount of the monetary adjustment made in each case; and (iv) the date on which each monetary adjustment listed and described pursuant to paragraph 3(c)(iii) was made. A copy of the written report required by this paragraph shall be submitted to and addressed by the Bank's board of directors at its next board meeting following preparation of the report, and a copy of the report, together with a record of the board's consideration and discussion thereof, shall be included in the board of directors' minutes.

[.5] 4. (a) Within 90 days of the effective date of this Order, the Bank shall conduct a search of its credit files to identify all outstanding extensions of credit secured by improved real estate or a mobile home located or to be located in an area that has been identified by the Director of the Federal Emergency Management Agency as an area having special flood hazards. The Bank shall determine whether, in the case of each outstanding extension of credit identified as a result of such file search, the building or mobile home and any personal property securing such extension of credit is covered for the term of the loan by flood insurance in an amount at least equal to the outstanding principal balance of the extension of credit or the maximum limit of coverage made available for the particular type of property under the National Flood Insurance Program.

(b) For each extension of credit identified by the Bank pursuant to the credit file search required by paragraph 4(a) of this ORDER which is determined to be secured by a building or mobile home or personal property which is required to be covered by flood insurance as described in paragraph 4(a) but is not so covered, the Bank shall take all necessary steps to secure or cause the borrower to secure the required flood insurance coverage for such property.
(c) Within 90 days from the effective date of this ORDER, the Bank shall prepare and submit to the Regional Manager a written report detailing the results of its credit file search as required by paragraph 4(a) of this Order, which report shall include: (i) the number of credit files searched; (ii) the number and dollar amounts of all extensions of credit, the security for which is required to be covered by flood insurance as described in paragraph 4(a); (iii) the amount of flood insurance coverage currently in effect for all extensions of credit listed and described pursuant to paragraph 4(c)(ii); (iv) the number and dollar amounts of all extensions of credit, the security for which is determined not to be covered by the required amount of flood insurance; and (v) the means by which and time within which the Bank will secure or cause the borrower to secure flood insurance coverage in the required amount for all extensions of credit listed and described pursuant to paragraph 4(c)(iv). A copy of the written report required by this paragraph shall be submitted to and addressed by the Bank's board of directors at its next board meeting following preparation of the report, and a copy of the report, together with a record of the board's consideration and discussion thereof, shall be included in the board of directors' minutes.

[.6] 5. Within 90 days from the effective date of this ORDER, the Bank shall take all necessary steps to improve its record of performance in ascertaining and meeting the credit needs of its entire local community, including low- and moderate-income neighborhoods, as required by the Community Reinvestment Act, 12 U.S.C. §§ 2901-2907 ("CRA"), and Part 345 of the Regulations, 12 C.F.R. Part 345. Such steps shall include, but are not necessarily limited to, the following:

[.7] 6. Following the effective date of this ORDER, the Bank shall send to its shareholders or otherwise furnish a description of this ORDER (a) in conjunction with the Bank's next shareholder communication and also (b) in conjunction with its notice or proxy statement preceding the Bank's next shareholder meeting. The description shall fully describe this ORDER in all material respects. The description and any accompanying communication, statement or notice shall be sent to the FDIC, Registration and Disclosure Section, 550 17th Street, N.W., Washington, D.C. 24029, for review at least 20 days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the description, communication, notice or statement.

   7. Within 90 days from the effective date of this ORDER, and within 15 days after the end of each calendar quarter thereafter while this ORDER remains in effect, the Bank shall furnish written progress reports to the Regional Manager detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Manager has released the Bank in writing from making further reports. All progress reports and other written responses to this ORDER shall be reviewed by the board of directors of the Bank and made a part of the minutes of the appropriate board meeting.
   8. The provisions of this ORDER shall become effective ten (10) days from the date of its issuance and shall be binding upon the Bank, its institution-affiliated parties, and its successors and assigns. The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.
   Dated at Atlanta, Georgia, this 30th day of January, 1995.
   Pursuant to delegated authority.

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