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FDIC Enforcement Decisions and Orders |
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Bank that failed to properly disclose to borrowers the appropriate annual percentage rate on loans secured by real estate, and failed to include prepaid "finance charges" in the finance charge, ordered to cease and desist. Bank in question also ordered to reimburse all persons to whom loans were made.
[.2] Regulation ZReimbursement to Borrowers
In the Matter of: * * * (INSURED
FINDINGS OF FACT AND
Accordingly, the Board of Directors adopts findings of fact numbered 1, 2, 5 and 9 and conclusions of law numbered 1, 2, 3 and 4 of the Administrative Law Judge. The Board also modifies the findings of fact numbered 3 and 4 and conclusions of law numbered 5 and 6 of the Administrative Law Judge to reflect the proper number of violations (nine) of the Truth in Lending Act and Regulation Z as admitted by the Bank. The Board of Directors also rejects findings of fact numbered 6, 7 and 8 and conclusion of law number 7 of the Administrative Law Judge and hereby finds the existence of a "clear and consistent pattern or practice" of violations. The Board also concludes that an order of adjustment is appropriate and would not have a potentially significant adverse impact upon the safety and soundness of the Bank.
ORDER TO CEASE AND DESIST
NOW, THEREFORE IT IS ORDERED, that the Respondent, its trustees, officers, employees and agents cease and desist from the violations set forth in the Findings of Fact and Conclusions of Law above, and further, that Respondent take affirmative action as follow:
/s/ Alan J. Kaplan (for)
FDIC-81-27b
RECOMMENDED DECISION
STATEMENT OF PROCEEDINGS AND
A hearing was held in * * *, on August 26 and 27, 1981, regarding charges brought against the * * * Bank by the Federal Deposit Insurance Corporation (FDIC, Petitioner) as a result of an examination performed by the agency.
EVIDENCE:
Mr. * * *, a compliance examiner for the Federal Deposit Insurance Corporation (Tr. 21-22), testified that he had examined disclosure statements of real estate loans made by the * * * Bank and that he found violations. The witness testified in detail as to the violations he found in Exhibit P-2 through P-10, and he presented Exhibits P-11 and P-12 to compare his calculations with the Bank's. In Exhibits P-2 through P-10, he found six of them to be in violation, but he also produced Exhibit P-14 as an example of a "perfect" form. He stated that the problem he found in the exhibits that were in violation was that the Bank calcu-
{{4-1-90 p.A-125}}lated its disclosure percentage based on the full amount of the loan and failed to deduct the prepaid finance charge from the amount of the loan on which the interest was charged. In two instances, i.e., in Exhibits P-3 and P-10, the Bank overstated the amount (see Tr. 38 and 53) and in Exhibit P-8 the Respondent stated it correctly. (Tr. 49)
RECOMMENDED FINDINGS OF FACT:
1. Respondent is a corporation existing and doing business under the laws of the State of * * *, with its principal place of business in * * *. At all times pertinent hereto, the Respondent has been an insured State nonmember bank.
5. In the cases of the loans in violation, the disclosed annual percentage rate was more than 25 "basis points" (hundredths of a percentage point) lower than the annual percentage rate properly computed in accordance with Regulation Z. This is not within the tolerance allowed by Section 107(c) of the TIL Act (15 U.S.C. §1606(c)) and Section 226.5(b) of Regulation Z, which allow a creditor to "round off an annual percentage rate to the nearest quarter of one percentage point.
RECOMMENDED CONCLUSIONS OF
1. Petitioner has jurisdiction over the Respondent and the subject matter of this proceeding.
[.2] 4. Petitioner's present authority to issue "cease-and-desist" orders includes the authority to require adjustments to the accounts of borrowers ("reimbursement") for certain kinds of violations of Regulation Z (15 U.S.C. §1607(a)(1)).
RECOMMENDED ORDER
That the charges against * * * Bank be vacated.
/s/ BARBARA L. HASSENFELD
Dated: January 26, 1982
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Last Updated 6/6/2003 | legal@fdic.gov |