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   [11,243] In the Matter of Maywood-Proviso State Bank, Maywood, Ill., Docket No. FDIC-95-104b (10-23-95).

   Bank to cease and desist from such unsafe or unsound practices as violating applicable consumer laws and failing to provide adequate supervision of the bank's compliance program to prevent violations of the consumer laws. (This order was terminated by order of the FDIC dated 10-29-96. See ¶16,126.)
   [.1] Violations of Law—Eliminate/Correct
   [.2] Truth in Lending Act—Notice to Borrowers
   [.3] Truth in Lending Act—Monetary Reimbursement to Consumer
   [.4] Real Estate Settlement Procedures Act—Compliance Required
   [.5] Home Mortgage Disclosure Act—Compliance Required
   [.6] Consumer and Civil Rights Laws—Compliance Program—Minimum Requirements
   [.7] Compliance Program—Audit Plan
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   [.8] Board of Directors—Compliance Committee
   [.9] Cease and Desist Order—Compliance Reports
   [.10] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

MAYWOOD-PROVISO STATE BANK
MAYWOOD,ILLINOIS
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-95-104b

   Maywood-Proviso State Bank, Maywood, Illinois ("Bank"), having been advised of its right to a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking practices and violations of law or regulation alleged to have been committed by the Bank, and of its right to a hearing on the charges under section 8(b) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated August 25, 1995, whereby, solely for the purpose of this proceeding and without admitting or denying the charges of unsafe or unsound banking practices and violations of law or regulation, 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 violated laws or 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 that 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 alleged unsafe or unsound banking practices and violations of law or regulations:
   (a) Violating applicable Consumer Laws; and
   (b) Failing to provide adequate supervision of the Bank's compliance program to prevent violations of the Consumer Laws. For purposes of this ORDER, "Consumer Laws" means those laws and regulations referenced in the FDIC Compliance Examination Manual, including the laws and regulations referred to in the FDIC's Compliance Report of Examination of the Bank as of July 25, 1994 ("Compliance Report").
   IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties, and its successors and assigns, take affirmative action as follows:

   [.1] 1. Within 30 days from the effective date of this ORDER, and as more specifically set forth in paragraphs 2 through 5 of this ORDER, the Bank shall eliminate or correct all violations of the Consumer Laws set forth on pages 2 through 3 of the Compliance Report. In addition, the Bank shall implement procedures to ensure its future compliance with all applicable Consumer Laws.

   [.2] 2. Within 30 days from the effective date of this ORDER, the Bank shall comply with the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., and Regulation Z of the Board of Governors of the Federal Reserve System ("Regulation Z"), 12 C.F.R. Part 226, including, but not limited to:

       (a) Disclosing premiums or charges for insurance written in connection with a credit transaction as a component of the cost of credit (finance charge and corresponding annual percentage rate) as required by sections 226.18(d) and 226.18(e) of Regulation Z, 12 C.F.R. §§ 226.18(d) and 226.18(e), unless the Bank satisfies all conditions described in section 226.4 (d)(1) of Regulation Z, 12 C.F.R. § 226.4 (d)(1);
       (b) Providing disclosures required under section 226.19(a)(1) of Regulation Z, 12 C.F.R. § 226.19(a)(1), in each residential mortgage transaction subject to the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq.;
       (c) Disclosing payment schedules (number, amount, and timing) that reflect the actual legal obligations between the Bank and consumers, as required under section 226.18(g) of Regulation Z, 12 C.F.R. § 226.18(g);
       (d) Disclosing information concerning assumptions, as required by section 226.18(q) of Regulation Z, 12 C.F.R. § 226.18(q); and
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       (e) Disclosing accurate annual percentage rates for all credit transactions subject to Regulation Z, as required by section 226.18(e) of Regulation Z, 12 C.F.R. § 226.18(e).

   [.3] 3. Within 60 days from the effective date of this ORDER, the Bank shall identify, notify, and provide monetary reimbursement to all consumers affected by the pattern or practice of violations subject to reimbursement under section 108(e) of the Truth in Lending Act, 15 U.S.C.§ 1607(e), discussed on pages 2 and 2-a of the Compliance Report, and illustrated by the calculation examples presented on pages 3-a through 3-a-5 of the Compliance Report, consistent with the Instructions provided by the Regional Manager of the Chicago Regional Office of the FDIC Division of Compliance and Consumer Affairs ("Regional Manager") to the Bank.

   [.4] 4. Within 30 days from the effective date of this ORDER, the Bank shall comply with the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq., and Regulation X of the U.S. Department of Housing and Urban Development ("Regulation X"), 24 C.F.R. Part 3500, and the U.S. Department of Housing and Urban Development's interim rule ("Interim Rule"), 56 Fed. Reg. 19508 (April 26, 1991), implementing section 6 of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605, including, but not limited to providing servicing transfer disclosure statements required by the Interim Rule or by any successor rules or requirements relating to servicing transfer disclosures under Regulation X.

   [.5] 5. Within 30 days from the effective date of this ORDER, the Bank shall comply with the Home Mortgage Disclosure Act, 12 U.S.C. §§ 2801 et seq., Regulation C of the Board of Governors of the Federal Reserve System ("Regulation C"), 12 C.F.R. Part 203, the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691 et seq., and the recordkeeping requirements of Part 338 of the FDIC Rules and Regulations, 12 C.F.R. Part 338, including, but not limited to:

       (a) Collecting and recording complete and accurate information in the Bank's Loan/Application Register, as required by section 338.8 of the FDIC Rules and Regulations, 12 C.F.R. § 338.8, and section 203.4(a) of Regulation C, 12 C.F.R. § 203.4(a);
       (b) Reporting complete and accurate home loan data by March 1 of each year, as required under section 203.5(a) of Regulation C, 12 C.F.R. § 203.5(a);
       (c) Complying with regulatory requirements and refraining from prohibited actions concerning information requests for monitoring purposes, as provided by section 203.4(b) of Regulation C, 12 C.F.R. § 203.4(b), section 338.7 of the FDIC Rules and Regulations, 12 C.F.R. § 338.7, and sections 202.5(d)(3) and 202.5(d)(5) of Regulation B, 12 C.F.R. §§ 202.5(d)(3) and 202.5(d)(5);
       (d) Posting a legible notice in the Bank's lobby, adjacent to the statement-availability notice posted pursuant to section 203.5(e) of Regulation C, 12 C.F.R. § 203.5(e), informing the public that the Bank's disclosure statement for 1993 loans and applications contains inaccuracies and is not deemed reliable.
       (e) Correcting all inaccuracies and omissions in the modified Loan/Application Register of activity for calendar year 1993, required to be made available to the public under sections 203.5(c) and 203.5(d) of Regulation C, 12 C.F.R. §§ 203.5(c) and 203.5(d), and including a dated summary of corrections with the publicly available modified register.

   [.6] 6. Within 90 days from the effective date of this ORDER, the Bank shall establish, and the Bank's board of directors shall adopt, a written compliance program that sets forth the policies and procedures designed to meet the Bank's compliance responsibilities. As used in this ORDER, "compliance program" means a planned and organized effort to achieve compliance with Consumer Laws in a comprehensive manner on an ongoing basis. The board of directors shall ensure implementation of, and adherence to, the compliance program. At a minimum, the compliance program shall address the following areas, as more specifically set forth in this paragraph: appointment and retention of a qualified compliance officer; education and training of a qualified compliance officer; education and training of bank personnel; and review, audit, and complaint resolution procedures.
   (a) The compliance program shall provide for the appointment and retention of a qualified compliance officer, including {{12-31-95 p.C-4130}}a clear delineation of that officer's authority and responsibilities.
       (i) The compliance officer shall be given written authority by the Bank's board of directors to implement and supervise the Bank's compliance program, including, but not limited to, overseeing training for the Bank's employees in the Consumer Laws, establishing internal controls and procedures reasonably designed to prevent violations of the Consumer Laws, and performing or supervising periodic audits to ascertain compliance with the Consumer Laws and the Bank's compliance program.
       (ii) The compliance officer shall report directly to the Bank's board of directors. The compliance officer may also report to the compliance committee, required in paragraph 8 of this ORDER, to provide assistance in the compliance committee's determination of the Bank's compliance with this ORDER.
       (iii) Within 10 days from the date of board of directors' adoption of the compliance program, the Bank shall notify the Regional Manager of the identity of the compliance officer. If the compliance officer is to be added as a director of the Bank or employed as a senior executive officer, the Bank shall comply with the requirements of section 32 of the Act, 12 U.S.C. § 1831i, and section 303.14 of the FDIC Rules and Regulations, 12 C.F.R. § 303.14, prior to the addition of the compliance officer to such position.
       (iv) The assessment of whether the Bank has a qualified compliance officer shall be based upon the officer's record of compliance with the requirements of this ORDER and with the Consumer Laws.
   (b) The compliance program shall provide for the education and training of Bank personnel in the requirements and prohibitions of the Consumer Laws.
       (i) This shall include training at least annually for all Bank employees whose duties and responsibilities include the need to comply with the Consumer Laws.
       (ii) The compliance officer shall oversee the Bank's training process with respect to the Consumer Laws.
       (iii) A summary of all compliance training conducted or attended by Bank personnel shall be reported to, and recorded in the minutes of a meeting of, the board of directors, at a minimum, each calendar quarter.
       (iv) The Bank shall provide the compliance officer with opportunities for continuing education and training in the Consumer Laws.
   (c) The compliance program shall provide for review, audit, and complaint resolution procedures. At a minimum, these shall include:
       (i) Review of loan application and disclosure procedures, for compliance with the Consumer Laws and Bank policy;
       (ii) Review of forms used by the Bank to comply with requirements of the Consumer Laws;
       (iii) Establishment of procedures to investigate, and respond to, consumer complaints; and
       (iv) Establishment of an audit program and schedule, which shall include policies and procedures for monitoring the Bank's compliance with the Consumer Laws, as described in paragraph 7 of this ORDER.

    [.7] 7. (a) Within 30 days from the effective date of this ORDER, the Bank's board of directors shall formulate and submit to the Regional Manager for review and comment a written audit plan for the Bank's compliance program. Any written audit plan for the Bank's compliance program shall provide that any audit procedure performed by Bank personnel shall be performed or supervised by the compliance officer. Additionally, any written audit plan for the Bank's compliance program shall provide that the results of any audit procedure shall be reported to the board of directors and shall be recorded in the minutes of the meetings at which such reports are made.
       (b) Within 30 days from the receipt of any comments from the Regional Manager, and after consideration of all such comments, the Bank shall implement the audit plan for the Bank's compliance program. The adoption of any such comments and changes should be recorded in the minutes of the board of directors' meeting.
       (c) Each calendar quarter following the {{12-31-95 p.C-4131}}implementation of the audit plan as described in subparagraph (b) above, the Bank or a consultant shall ensure that the audit procedures required by the audit plan are executed.

   [.8] 8. Within 30 days from the effective date of this ORDER, the Bank shall establish a compliance committee comprised of at least two directors. No compliance committee member may be an executive officer or principal shareholder, as those terms are defined in section 215.2(e)(1) and 215.2(m)(1) of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. §§ 215.2 (e)(1) and 215.2(m)(1). The committee shall monitor compliance with this ORDER and within 60 days from the effective date of this ORDER, and on a monthly basis thereafter, shall submit to the board of directors for consideration at each monthly meeting a written report detailing the Bank's compliance with this ORDER. The monthly report by the compliance committee shall be incorporated into the minutes of the corresponding board of directors' meeting. Establishment of this committee does not in any way diminish the responsibility of the entire board of directors for ensuring compliance with the provisions of this ORDER.

   [.9] 9. Within 30 days from the end of the first calendar quarter following the effective date of this ORDER, and within 30 days from the end of each successive calendar quarter, the Bank shall furnish written progress reports to the Regional Manager detailing the form and manner of any action taken to secure compliance with this ORDER and the results thereof. All progress reports and other written responses to this ORDER shall be reviewed by each member of the Bank's board of directors, and such reviews shall be recorded in the minutes of the board meetings. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Regional Manager has, in writing, released the Bank from making additional reports.

   [.10] 10. Following the effective date of this ORDER, the Bank shall send to its shareholders 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 the ORDER in all material respects. The description and any accompanying communication, notice, or statement shall be sent to the FDIC Registration and Disclosure Unit, 550 17th Street, N.W., Washington, D.C. 20429-9990, for review at least twenty 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.
   The effective date of this ORDER shall be ten days from the date of its issuance by the FDIC.
   The provisions of this ORDER shall be binding upon the Bank, its institutionaffiliated parties, and any successors and as-signs thereof.
   The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provision of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.
   Dated at Washington, D.C., this 23rd day of October, 1995.
   Pursuant to delegated authority.

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