The Entire Manual

Introduction

The Consumer Compliance Examination Manual (Manual) is designed as a reference tool for Compliance examination staff to use when conducting Compliance and Community Reinvestment Act (CRA) examinations and other supervisory activities.  The detailed procedures presented in the Manual are not intended to replace sound judgment and discretion on the part of examination staff.  Instead, the materials are designed to promote uniformity in the examination process and as a reference tool for examiners.

Organization of the Manual

The Manual is divided into 12 sections as described below and is organized so that information is presented based on regulation rather than process.  The Manual incorporates examination policies and procedures in effect as of the most recent update, which is noted in the footnote in each subsection.  The Manual begins with the risk focused, process oriented examination procedures (Section II) and sample templates to use during the examination (Section III).  Sections IV through X cover specific rules and regulations, divided into general topics.  The Manual concludes by covering the Community Reinvestment Act examination (Section XI) and samples of the various performance evaluations (Section XII) to be used.  Each Section of the Manual is discussed below.

• I – Manual Introduction – This section includes information on how to use the Manual as well as a list of common abbreviations.
• II – Consumer Compliance Examinations – This section covers the Compliance Examination process beginning with pre-examination planning through determining the rating.  Also included is information on documenting examination findings, enforcement actions, appeals, visitations, investigations, and violation codes.
• III – Compliance Examination Templates & Samples – This section provides sample forms and templates to be used during Compliance Examinations, including a sample letter for the pre-examination information package and a sample Bank of Anytown Report of Examination.
• IV – Fair Lending Laws and Regulations – This section addresses the procedures for evaluating compliance with the Fair Lending provisions of Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHAct).  Examination procedures and checklists are included.  Procedures for evaluating compliance with the technical, non-discriminatory provisions of ECOA and FHAct are covered in Section V.
• V – Consumer Compliance Lending Issues – This section covers lending related topics including Truth in Lending, Truth in Lending Questions and Answers, Real Estate Settlement Procedures, Homeownership Counseling, Homeowners Protection, Flood Insurance, Flood Questions and Answers, Equal Credit Opportunity and Fair Housing, Home Mortgage Disclosures, Consumer Leasing, Servicemembers Civil Relief Act, and Talent Amendment.  Examination procedures and checklists are included.
• VI – Consumer Compliance Depository Issues – This section covers deposit function related topics including Expedited Funds including Check 21, Electronic Funds Transfers, and Truth in Savings, and Interest on Deposits.  Examination procedures and checklists are included.
• VII – Unfair and Deceptive Practices – This section covers issues relating to unfair and deceptive practices including Unfair and Deceptive Acts, Credit Practices, Preservation of Claims of Consumer Claims and Defenses, and Fair Debt Collection.  Examination procedures and checklists are included.
• VIII – Privacy and Consumer Information – This section covers issues relating to privacy issues including Gramm-Leach-Bliley Privacy of Consumer Financial Information, Children’s Online Privacy Protection, Right to Financial Privacy, Controlling the Assault of Non-Solicited Pornography and Marketing, Telephone Consumer Protection, and Fair Credit Reporting.  Examination procedures and checklists are included.
• IX – Retail Sales – This section covers retail sales to consumers for Investment and Insurance Sales.  This topic is often referred to as Non-Deposit Products or NDP.  Examination procedures and checklists are included.
• X – Other Consumer Compliance Issues – This section covers Compliance Examination related topics not included in the prior sections.  Included are issues relating to Membership Advertising, Branch Closings, E-Sign, and Interstate Banking and Branching.  Examination procedures and checklists are included.
• XI – Community Reinvestment Act – This section covers CRA related examination procedures for all types and asset sizes of institutions as well as the CRA Sunshine Act, and CRA Questions and Answers.  Examination procedures and checklists are included.
• XII – Community Reinvestment Act Performance Evaluation Templates – This section provides samples of Performance Evaluations for all sizes and types of institutions under CRA.

How to Use the Manual

The Manual incorporates existing policies and procedures, adding information, job aids, and references that may assist the reader.  Each Section includes pertinent background material, examination procedures, references, and job aids to assist the examiner in the examination process.  Each subtopic covered in the Sections is included independently in the Manual and can be readily removed, replaced, and updated.  In addition, the electronic version is divided into corresponding sections and topics.  When new examination policies and procedures are released and incorporated into the Manual, they will be available through FDIC.gov.

ACH – Automated Clearing House

APR – Annual Percentage Rate

APY – Annual Percentage Yield

ARD – Assistant Regional Director

ARCH – Assessment of Risk of Consumer Harm

ARM – Adjustable Rate Mortgage

ATM – Automated Teller Machine

BOD – Board of Directors

BPMI – Borrower–Paid Private Mortgage Insurance

CAA – Community Action Agencies

CAN–SPAM – Controlling the Assault of Non–Solicited Pornography and Marketing Act

CD – Community Development

CDC – Community Development Corporation

CDFI – Community Development Financial Institution

CFPB – Consumer Financial Protection Bureau

CFR – Code of Federal Regulations

CIDR – Compliance Information and Document Request

CLA – Consumer Leasing Act

CMP – Civil Money Penalty

CMS – Compliance Management System

COPPA – Children’s Online Privacy Protection Act

C–PREP – Compliance Pre–Examination Request Package

CRA – Community Reinvestment Act

CSA – Combined Statistical Area

CT – Census Tract

DCP – Division of Depositor and Consumer Protection

DOJ – Department of Justice

DPO – Deposit Production Office

DRD – Deputy Regional Director

E–SIGN – Electronic Signatures in Global and National Commerce Act

EBT – Electronic Benefits Transfer

EC – Economic Community

ECOA – Equal Credit Opportunity Act

EDA – Economic Development Administration

EDC – Economic Development Corporation

EFA – Expedited Funds Availability Act

EFTA – Electronic Fund Transfers Act

EIC – Examiner–In–Charge

EZ – Empowerment Zone

FC – Finance Charge

FCC – Federal Communications Commission

FCRA – Fair Credit Reporting Act

FDCPA – Fair Debt Collection Practices Act

FDPA – Flood Disaster Protection Act

FDI Act – Federal Deposit Insurance Act

FDIC – Federal Deposit Insurance Corporation

FEMA – Federal Emergency Management Agency

FFIEC – Federal Financial Institutions Examination Council

FHA – Federal Housing Administration

FHAct – Fair Housing Act

FHLB – Federal Home Loan Bank

FHLMC – Federal Home Loan Mortgage Company (Freddie Mac)

FIA – Federal Insurance Administration

FIAP – Formal and Informal Actions Procedures

FIMA – Federal Insurance and Mitigation Administration

FIRM – Flood Insurance Rate Map

FL – Fair Lending

FLSC – Fair Lending Scope and Conclusions Memorandum

FNMA – Federal National Mortgage Association (Fannie Mae)

FO – Field Office

FOCUS – Framework for the Oversight of Compliance and Community Reinvestment Act Activities User Suite

FOIA – Freedom of Information Act

FRB – Federal Reserve Board

FS – Field Supervisor a/k/a FOS – Field Office Supervisor

FTC – Federal Trade Commission

GENESYS – General Examination System

GFE – Good Faith Estimate

GLBA – Gramm–Leach–Bliley Act

GNMA – Government National Mortgage Association (Ginnie Mae)

HEOA – Higher Education Opportunity Act

HERA – Housing and Economic Recovery Act of 2008

HFIAA – Homeowner Flood Insurance Affordability Act

HMDA – Home Mortgage Disclosure Act

HOC – Homeownership Counseling Act

HOEPA – Home Ownership Equity Protection Act

HOPA – Homeowners Protection Act

HPML – Higher–Priced Mortgage Loan

HUD – Department of Housing and Urban Development

IAP – Institution Affiliated Party

IP – Pre–Examination Information Package

IBBEA – Interstate Banking and Branching Efficiency Act

IRA – Individual Retirement Account

IRS – Internal Revenue Service

ISB – Intermediate–Small Bank (CRA)

LAR – Loan/Application Register

LPMI – Lender–Paid Private Mortgage Insurance

LPO – Loan Production Office

LTD – Loan to Deposit Ratio

LTV – Loan to Value

MD – Metropolitan Division

MFI – Median Family Income

MICR – Magnetic Ink Character Recognition

MMDA – Money Market Demand Account

MOU – Memorandum of Understanding

MPPP – Mortgage Portfolio Protection Program

MSA – Metropolitan Statistical Area

MSD – Material Supervisory Determination

NASD – National Association of Securities Dealers

NCUA – National Credit Union Administration

NDP – Non–Deposit Products

NFIP – National Flood Insurance Program

NGEP – Non–governmental Entity or Person

NOW – Negotiable Order of Withdrawal

OCC – Office of the Comptroller of the Currency

ODP – Overdraft Program

OMBE – Office of Minority Enterprise

OREO – Other Real Estate Owned

OTS – Office of Thrift Supervision

PCCD – Preservation of Consumers’ Claims and Defenses

PE – Performance Evaluation

PEP – Pre–Examination Planning

PMI – Private Mortgage Insurance

POS – Point of Sale

PPFC – Prepaid Finance Charge

Q & As – Questions and Answers

RADD – Regional Automated Document Distribution

RCBAP – Residential Condominium Building Association Policy

RE – Review Examiner

RESPA – Real Estate Settlement Procedures Act

RFPA – Right to Financial Privacy Act

RMS – Division of Risk Management Supervision

RO – Regional Office

ROE – Report of Examination

SAFE – Secure and Fair Enforcement for Mortgage Licensing Act

SARC – Supervision Appeals Review Committee

SBA – Small Business Administration

SBCD – Small Business Development Center

SBIC – Small Business Investment Corporation

SCRA – Servicemembers Civil Relief Act

SE – Supervisory Examiner

SEC – Securities Exchange Commission

SFHA – Special Flood Hazard Area

SFHDF – Standard Flood Hazard Determination Form

SPCP – Special Purpose Credit Program

SSBIC – Specialized Small Business Investment Corporation

STARS – Specialized Tracking and Reporting Systems

TCPA – Telephone Consumer Protection Act

TILA – Truth in Lending Act

TISA – Truth in Savings Act

TPPP – Third Party Payment Processor

UBPR – Uniform Bank Performance Report

UDAAP – Unfair, Deceptive, or Abusive Acts or Practices

UDAP – Unfair or Deceptive Acts or Practices

USC – United States Code

VA – Department of Veterans Affairs

WYO – Write Your Own (policy)

Introduction

The Federal Deposit Insurance Corporation (FDIC) promotes compliance with federal consumer protection laws, fair lending statutes and regulations, and the Community Reinvestment Act through supervisory and outreach programs. The FDIC conducts three types of supervisory activities to review an institution’s compliance management system: consumer compliance examinations, visitations, and investigations.

Consumer compliance examinations are the primary means the FDIC uses to determine whether a financial institution is meeting its responsibility to comply with the requirements and proscriptions of federal consumer protection laws and regulations. The consumer compliance examination review period or scope typically covers bank activities conducted over a discrete period of time from the start date of the prior examination through the start date of the current examination. The FDIC conducts visitations for a variety of reasons: to review the compliance posture of newly-chartered institutions or those converting to state non-member status; to review progress on corrective actions or compliance with an enforcement action in the interval between examinations; or to investigate problems brought to the attention of the FDIC. Visitations are usually targeted events aimed at specific operational areas, or an entire compliance management system (CMS) previously identified as significantly deficient. Consumer compliance examinations and visitations may also be considered during the review of an application submitted to the FDIC (e.g., application for deposit insurance or establishing a branch). Finally, investigations are conducted primarily to follow-up on particular consumer inquiries or complaints, including fair lending complaints.

This section provides a general overview of the FDIC compliance examination. The purposes of compliance examinations are to:

• assess the quality of an FDIC-supervised institution’s CMS (see “Evaluating the Compliance Management System”) for implementing federal consumer protection statutes and regulations;
• review compliance with relevant laws and regulations; and
• initiate effective supervisory action when elements of an institution’s CMS are deficient and/or when violations of law are found.

Examination Approach

In general, FDIC consumer compliance examinations of supervised institutions blend risk-focused and process-oriented approaches. Risk-focusing involves using information gathered about a financial institution to direct FDIC examiner resources to those operational areas where compliance errors present the greatest potential risks of having a negative impact on bank customers, resulting in consumer harm (See the Evaluating Impact of Consumer Harm section of this manual for additional information.) Concentrating on the institution’s internal control infrastructure and methods, or the “process” used to ensure compliance with federal consumer protection laws and regulations, both acknowledges that the ultimate responsibility for compliance rests with the institution and encourages examination efficiency. These examinations are conducted at periodic intervals established by FDIC policy.

In addition, for certain institutions that exhibit elevated or unique risks of consumer harm (See the Complex Bank Supervision Program section of this manual for additional information), the FDIC has implemented a Complex Bank Supervision Program that employs a continuous supervisory strategy. These institutions often have complex business models, offer nontraditional products or services, and/or rely heavily on third-party relationships.

Determining Risk

Risk-focusing involves:

• developing a compliance risk profile for an institution using various sources of information about its products, services, markets, organizational structure, operations, and past supervisory performance;
• assessing the quality of an institution’s CMS in light of the inherent risks associated with the level and complexity of its business operations and product and service offerings; and
• testing selected transactions based on risk such as when an operational area is determined to have a high risk of consumer harm and the institution’s compliance management efforts appear weak.

Evaluating the Compliance Management System

Compliance examinations start with a top-down, risk-focused process to comprehensively analyze and review an institution’s CMS. The compliance examiner considers:

Board and Management Oversight

• Commitment to and oversight of the institution’s CMS;
• Level of resources dedicated toward compliance functions;
• Due diligence and oversight of third parties to ensure compliance with consumer protection laws and regulations, and appropriate oversight of third parties’ compliance responsibilities;
• Anticipation and responsiveness to changes in applicable laws and regulations, market conditions, and products and services offered;
• Due diligence reviews performed in advance of product changes, considering the entire lifecycle of the product or service, and after implementation of changes;
• Comprehension and identification of compliance risks, including emerging risks, in the institution’s financial products, services, and other activities;
• Management of identified risks, including self-assessments; and
• Identification of and responsiveness to compliance risk management deficiencies and violations of law or regulations, including remediation.

Compliance Program

• Appropriateness of the institution’s policies and procedures to address the risk in the products, services, and activities of the institution;
• Adequacy of third-party relationship program management;
• Degree to which compliance training is current and tailored to risk and staff responsibilities;
• Sufficiency of monitoring and, if applicable, audit to encompass compliance risks throughout the institution; and
• Responsiveness and effectiveness of the consumer complaint resolution process.

Based on the results of this review, the examiner may conclude that weaknesses in the institution’s CMS may result in current or future noncompliance with federal consumer protection laws, regulations, or policy statements, thereby resulting in potential consumer harm. The examiner must determine, based on this analysis, whether transaction testing is warranted to further study particular risk in an entire operational area or regulation, or only a limited aspect of an area or regulation.

The FDIC examination approach appropriately recognizes that the Board of Directors and management of a financial institution are responsible for complying with all federal consumer protection laws and regulations. While the formality and complexity of the CMS will vary greatly among institutions, the FDIC expects the Board of Directors and management of each institution to have a system in place to effectively manage its compliance risk, consistent with the size and complexity of its products, services, and markets.

Managing the examination based on risk maximizes examiner efficiency and may reduce the on-site examination presence or examination timeframe, while emphasizing areas requiring elevated supervisory attention. By focusing on the CMS, examiners will be able to identify the root causes of deficiencies and suggest appropriate corrective actions designed to address the problem and prevent recurrence.

Applicability and Adaptability to Large and Small Institutions

In order to provide as much relevant and useful guidance as possible, the procedures detailed in this Manual include instructions for reviewing the various elements of a CMS, such as written policies and procedures, monitoring and/or audit, and training. When these elements are in place at an institution being examined, the examiner will use the guidance to evaluate their effectiveness. However, the fact that certain elements of a CMS are described in these examination procedures is not intended to suggest that all institutions must maintain a CMS that includes all of these elements. Many institutions do not. There is no reason for them to, if their operations do not warrant it. Conclusions about the adequacy of a bank’s CMS must be based on the effectiveness of those elements that are in place, taken as a whole, for that bank’s particular operations.

For example, assume two institutions – a large, complex bank and a small, non-complex bank – each has a record of strong compliance with all regulations that apply to the products and services it offers. Because of the complex nature of its operations, the large bank’s CMS includes comprehensive external audits and formalized training from third-party vendors. The smaller bank’s CMS includes no internal or external audits and no formalized training except for the compliance officer, who trains bank staff individually when needed. After reviewing all relevant material available, the examiner finds no significant deficiencies in the small bank’s CMS and no reason to believe that the adoption of an audit function or formalized training is necessary to ensure ongoing compliance. The examiner would not criticize the small bank for the absence of audit (or formal training). Nor should the examiner feel obliged to assign a higher rating to the larger bank simply because its CMS has more elements than the smaller bank. This is because each bank has a CMS that is adequate for the compliance responsibilities that are incumbent upon it due to its operating environment.

The descriptions of CMS elements provided in the Manual will assist the examiner in evaluating the element if one exists and in suggesting content if he or she determines that management should consider adopting an element.

Role of the Compliance Examiner

Compliance examiners play a crucial role in the supervisory process. The compliance examination, and follow-up supervisory attention to an institution’s compliance program deficiencies and violations, helps to ensure that consumers and businesses obtain the benefits and protections afforded them under federal law. To this end, an examiner’s efforts should help the financial institution improve its compliance posture and prevent future violations.

Primarily, examiners must:

• establish an examination scope focused on areas of highest consumer harm risk;
• evaluate an institution’s CMS;
• conduct transaction testing where risks intersect with weaknesses in the CMS or uncertainties about aspects of that system; and
• report findings to the Board of Directors and management of the institution.

As part of the examination process, examiners are expected to:

• take a reasoned, common sense approach to examining and use sound judgment when making decisions;
• maintain ongoing communication with financial institution management throughout an examination;
• assist an institution to help itself improve performance by providing management with sound supervisory recommendations for enhancing its CMS;
• share experiences and knowledge of a successful CMS; and
• provide guidance regarding the various consumer protection and fair lending laws and regulations.

‌Overview of the Examination Process

Compliance examinations primarily involve three stages: pre-examination planning; review and analysis, both off-site and on-site; and communicating findings to institution management via meetings and a Report of Examination.

Pre-examination Planning

Pre-examination planning involves gathering information available in FDIC records and databases, contacting the financial institution to review and narrow the draft request for information and documents, and delivering a letter to the institution requesting specific information and documents for detailed analysis by the examination team (see Section III). Proper examination preparation and planning maximizes an examination team’s time and resources.

Review and Analysis

During the review and analysis phase of an examination, an examiner thoroughly evaluates an institution’s CMS to assess its quality and effectiveness, and documents system weaknesses and violations of federal consumer protection laws and regulations, if any. The Examiner-in-Charge (EIC) starts by analyzing information about the type, level, and complexity of the institution’s operations, and begins to develop the scope of the examination and plan for resource deployment to areas of highest risk. The EIC also preliminarily assesses the potential risk of consumer harm based upon the information available at the time of pre-examination planning.

The scope of an examination will be preliminarily established prior to entering the financial institution, and should be refined through the results of examiner discussions with management, the compliance officer (or staff assigned), and the internal auditor. Consistent with the FDIC’s approach, examination resources are focused on addressing the areas of highest consumer harm risk. Additionally, there may be some cases where the EIC may include additional areas in the examination scope even though consumer harm risk is not exhibited. An examiner may also limit the scope of the compliance review based on reliable procedures and controls in place. Similarly, the examiner may expand the review based on, for example, management’s view about compliance, a lack of necessary procedures or controls, the presence of violations, the identification of potential or actual consumer harm, or the presence of new or significantly amended regulations. The compliance review continues with an evaluation of the:

• commitment of the Board of Directors, management, and staff to compliance;
• qualifications of the compliance officer or designated staff;
• scope and effectiveness of compliance policies and procedures;
• effectiveness of training;
• thoroughness of monitoring and any internal/external reviews or audits; and
• responsiveness of the Board of Directors and management to the findings of internal/external reviews and to the findings of the previous examination.

An examiner must consider the size, level, and complexity of an institution’s operations when evaluating the adequacy of an institution’s CMS.

The examination procedures outlined in this Manual are designed to enable an examiner to identify and measure compliance risk; make an assessment of an institution’s compliance infrastructure and methods for identifying, monitoring, and controlling compliance risk and potential consumer harm; and determine the transaction testing needed to assess the integrity of the CMS. The number of transactions selected and the type of sampling used should be relative to the perceived risk of consumer harm and the need to assess the level of compliance in an activity or function.

At the conclusion of the review and analysis phase, an examiner:

• summarizes all findings regarding the strengths and weaknesses of an institution’s CMS;
• determines the cause(s) of programmatic deficiencies or Level 3 or Level 2 violations and relates them to the underlying root causes as well as specific weakness(es) in the institution’s CMS; and
• identifies actions necessary to address deficiencies or violations.

Determining the cause(s) of a program deficiency or violation is critical to recommending solutions that will successfully address problem areas and strengthen an institution’s compliance posture for the future.

Communicating Findings

Examiners must discuss findings and supervisory recommendations with management and obtain a commitment for corrective action. These discussions will be held during the course of the examination and at an exit meeting with management and/or the Board of Directors.

The results of the examination will also be communicated to the Board of Directors and management of the institution in a Report of Examination. The Report of Examination provides an account of the strengths and weaknesses of a CMS during the review period. It is more than an exception-based document and should add value to the institution’s compliance efforts.

Distinguishing Between Laws, Regulations, and Supervisory Guidance

Supervisory communications should distinguish clearly and accurately between the requirements of laws and regulations, which are legally binding and enforceable, and supervisory guidance, which is not itself enforceable but sets forth information including the factors the FDIC considers when exercising its supervisory authority.

As articulated in the Interagency Statement Clarifying the Role of Supervisory Guidance dated September 17, 2018 (FIL-49-2018), unlike a law or regulation, supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance. Rather, supervisory guidance outlines the agencies’ supervisory expectations or priorities and articulates the agencies’ general views regarding appropriate practices for a given subject area.

Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance. Rather, any citations will be for violations of law, regulation, or non-compliance with enforcement orders or other enforceable conditions. During examinations and other supervisory activities, examiners may identify deficiencies in compliance risk management, or other areas that do not constitute violations of law or regulation. In some situations, examiners may reference (including in writing) supervisory guidance to provide examples of appropriate consumer protection practices, and other actions for addressing compliance with laws or regulations.

References

FIL-3-2021: FDIC Adopts Rule on the Role of Supervisory Guidance

Introduction

The FDIC has a risk-focused consumer compliance examination approach, based on the potential for compliance errors to have an adverse impact on banking customers. The following guidance is provided to assist compliance examiners in understanding the impact of consumer harm¹ on examination and supervisory responsibilities. In addition, this guidance communicates to examiners information about bank activities or omissions that can frequently result in consumer harm. Examination activities promote and confirm FDIC-supervised institutions’ compliance with federal consumer protection and fair lending laws, the Community Reinvestment Act, and the regulations that implement these requirements. Effective supervision focuses on the areas requiring elevated supervisory attention and promotes the efficient use of resources.

What is Consumer Harm?

The FDIC’s consumer compliance examination process is risk-focused based on the potential for consumer harm. “Consumer Harm” is an actual or potential injury or loss to a consumer, whether such injury or loss is economically quantifiable (e.g., overcharge) or non-quantifiable (e.g., discouragement). It may be caused by a financial institution’s violation of a federal consumer protection law or regulation directly or through a third party or reflects weaknesses in a financial institution’s compliance management system. Consumer Harm may occur in a variety of ways, including:

1. Quantifiable harm – Economic harm to a consumer where the injury or loss can be measured. For example, a consumer may suffer monetary harm as a result of deceptive marketing practices that entices a consumer to purchase a product without having accurate information regarding the benefits, costs, or terms of the product in violation of Section 5 of the Federal Trade Commission Act. Similarly, if a bank employs a pricing structure that allows significant discretion, without effective monitoring or controls, resulting in a protected class of borrowers being charged higher prices on average than similarly situated non-protected borrowers in violation of the Equal Credit Opportunity Act, then the higher prices paid by the protected class of borrowers over similarly situated non-protected borrowers is quantifiable consumer harm.
2. Non-quantifiable harm – Injury or loss to the consumer that cannot be measured, or is very difficult to measure, yet the consumer may suffer some form of economic or other harm. For example, a consumer could be injured economically when a financial institution unfairly denies the consumer credit or discourages an application on a prohibited basis in violation of the Equal Credit Opportunity Act, however calculating a monetary value for the injury may be challenging. Another example may be a bank that imposes additional, unlawful requirements on consumers before the bank is willing to consider the consumers’ billing disputes or requirements that are not accurately divulged in the bank’s error resolution disclosures. The practices could discourage a consumer from filing a dispute. Consumer harm exists, but may be difficult to identify and/or quantify.
3. Potential harm – Involves financial institution activities (or failure to take action) that create the possibility that a consumer may be harmed. An example of potential consumer harm is a violation of the regulations that implement the National Flood Insurance Act of 1968 where the financial institution failed to require flood insurance on a residence at loan closing. The consumer has not suffered actual loss but is exposed to potential economic loss should a flood occur.

Consumer harm is a broad concept and the examples provided here are not exhaustive. Among key points are that consumer harm is not limited to monetary loss, can be quantifiable or non-quantifiable, can be actual harm or potential harm, and may be caused by activities conducted through third-party relationships.

How does Consumer Harm Impact Examination Activities?

The concept of consumer harm is an important consideration in all examination and enforcement efforts, including examination strategies, examination scoping activities, assessment of the CMS, content of examination reports, supervisory actions, and communications with bankers. The FDIC’s mission of promoting public confidence in the financial system is best served through a supervisory approach focused on identifying, addressing, and preventing consumer harm.

• Identification – Supervisory and examination activities are driven by a focus on identifying the inherent risk of consumer harm that may occur in a financial institution’s business activity. Inherent risk is the compliance risk associated with product and service offerings, practices, or other activities that could directly or indirectly result in significant consumer harm or noncompliance with consumer protection rules and regulations. For example, a new loan product, a change to deposit account terms, or a third party relationship all represent inherent risk.
• Addressing identified risks – When inherent risks of consumer harm are identified, examiners will ensure the institution takes appropriate action to address or mitigate these risks. Corrective action for violations of law and regulations should remediate consumer harm when it occurs and remove underlying incentives to engage in practices harmful to consumers. Where there is a violation of law or regulation, the extent and severity of consumer harm informs the type and scope of enforcement action sought to correct the violation.
• Prevention – Mitigating factors are the strength of the compliance management system (CMS) to mitigate inherent risk. Examples of mitigating factors include strong management controls, effective training programs, and on-going monitoring efforts. Supervisory efforts should encourage institutions to have an effective CMS to avoid and mitigate risks of consumer harm. To support that effort, examination and other staff communicate information and best practices in a variety of settings to assist institutions in managing risks of consumer harm when conducting their business. Identifying, addressing, and preventing consumer harm is an important consideration in all examination and enforcement activities, as identified in the following diagram and discussed below.

Supervisory Strategies

The FDIC’s supervisory strategies are designed to promote compliance with consumer protection laws and regulations in FDIC-supervised institutions. Activities used to implement FDIC supervisory strategies include examinations, targeted reviews, visitations, investigations, and offsite analysis of how the bank manages its consumer compliance responsibilities. The timing and frequency of these activities can be adjusted based upon indications of risk of consumer harm, such as consumer complaints, referral from other divisions or agencies, changes in the institutions’ products, services, or markets, or reliance on third parties to offer products and services to consumers. Supervisory strategies should be flexible to respond to indications of increasing or decreasing risk of consumer harm.

Examination Scoping Activities

All applicable federal consumer compliance laws and regulations are considered in connection with any bank compliance examination through the risk scoping process. However, the FDIC’s supervisory approach apportions resources to areas of higher risk for consumer harm rather than to uncovering technical issues in meeting regulatory requirements. This approach also results in the identification of the most serious violations of federal consumer compliance laws and regulations during the examination. If financial institutions understand the potential for consumer harm and choose to develop and implement institution-specific plans, policies, and processes to prevent and mitigate consumer harm based on their risk profiles, it may assist institutions in avoiding risk and promoting compliance with the federal consumer protection regulations.

Examiners have several tools available to assist them in identifying risks of consumer harm. Examiners evaluate risks of consumer harm through an analysis of an institution’s historical CMS, the products and services currently offered, the markets served, and existing and new third-party relationships. Examiner judgment is the most critical aspect of properly evaluating an institution’s risk profile. The FDIC’s approach tailors the examination to focus primarily on those areas that present the highest risk of consumer harm, as examiners are unable to review all aspects of an institution’s CMS at any given examination. The pre-examination planning process, which includes review of the pre-exam questionnaire with bank management and preparation of the automated Compliance Information and Document Request (CIDR), guides examiners in requesting the information necessary to identify areas of the greatest risk of potential consumer harm.

In scoping examinations, examiners consider the inherent risks associated with product and service offerings or other activities that could directly or indirectly result in consumer harm. Inherent risk refers to the risk that a product, service, practice, or other activity would pose if no controls or other mitigating factors were in place. Examiners also focus on whether a bank is effectively and independently managing or mitigating the risk of consumer harm that comes from the products and services the institution offers and markets in which they serve. After considering an institution’s inherent risks, and the strength of its CMS, residual risk exposure may remain.

Residual risk refers to the risk exposure that remains after identifying the level of inherent risk and factoring in the strength of the mitigating factors to control that risk. The guiding principle is a risk scoping formula: inherent risk – mitigating factors = residual risk. For example, a bank introduces a new overdraft program with no due diligence, no monitoring or auditing, and numerous customer inquiries. This example represents a high risk product without effective CMS elements to mitigate inherent risk; therefore, a higher level of residual risk remains, and this product warrants review and transaction testing during an examination. As part of the examination scoping process, examiners focus on areas where residual risk is elevated and not on areas where risk is well-controlled and residual risk of consumer harm is low.

Examination Procedures

Examination procedures are drafted and implemented in a manner to guide examiners in assessing the risk of consumer harm in the conduct of the examination. Well-crafted examination procedures that are focused on risks and potential for consumer harm promote the efficient use of resources, identification of root causes of deficiencies, and allocation of resources to areas presenting the highest risk, while avoiding unnecessary review of areas with little or no risk of consumer harm. As an example, examination procedures regarding overdraft programs differentiate the type and extent of review based on the type of overdraft program offered (e.g., automated versus ad hoc) and further reserves more detailed transaction testing to situations where examiners have identified specific risks or weaknesses.

Consumer Compliance Examination Ratings

The Federal Financial Institutions Examination Council’s Uniform Interagency Consumer Compliance Rating System (CC Rating System), which is a supervisory policy for evaluating financial institutions’ adherence to consumer compliance requirements, includes a section titled Violations of Law and Consumer Harm.² The CC Rating System emphasizes the importance of institution’ compliance management systems, with emphasis on compliance risk management practices designed to manage consumer compliance risk, support compliance, and prevent consumer harm. Examiners consider this section as they assess institutions’ compliance with the federal consumer protection laws and regulations.

Report Presentation

The Report of Examination plays an important role in communicating the FDIC’s assessment of the CMS to the institution. The FDIC classifies violations of federal consumer laws based, in part, on the level of risk of consumer harm. In the event violations are identified in the Report of Examination, this classification process serves to communicate to banks the FDIC’s conclusions about the severity, extent, or potential consumer harm caused by the violation. The expectation is that FDIC-supervised institutions will prioritize corrective action and on-going management of their CMS to correct errors and mitigate risks of consumer harm.

Supervisory Actions

Effective supervision includes requiring institutions to take corrective action when weaknesses in the CMS or violations are identified. Appropriate corrective action considers the overall effectiveness of the institution’s CMS, the root cause(s) of the deficiencies as well as the extent and impact of consumer harm. When there is a violation of law or regulation that results in consumer harm, the FDIC will seek corrective action, which may include restitution to consumers as part of an appropriate enforcement action. Civil money penalties (CMPs) may also be assessed to sanction an institution or an institution-affiliated party according to the degree of culpability. Other factors examiners consider include intent and severity of the violation of law or regulation, breach of fiduciary duty, and/or whether a practice is unsafe or unsound. CMPs are also assessed to deter future misconduct.

Communication and Technical Assistance

Communication and technical assistance to supervised institutions is an important component of the FDIC’s supervisory approach in preventing consumer harm by supporting institutions’ efforts to maintain an effective CMS. 

Communication is especially important during periods of regulatory change and transition. The FDIC communicates through a number of channels, including national and regional bankers’ teleconferences on emerging topics; speaking engagements at national, regional, state, and local conferences and conventions; a web-based regulatory calendar; Supervisory Insights Journal articles; regional newsletters; banker and bank director trainings and online technical assistance videos; meetings with industry trade groups; and issuance of guidance through Financial Institution Letters. Communicating the focus of FDIC examination efforts and supervisory priorities through these diverse channels assists bankers in identifying and reviewing key areas of concern and addressing deficiencies promptly, prior to and unrelated to a specific examination activity. In addition, examiners can provide certain types of technical assistance to community bankers during the course of an examination that may enable an institution to reduce the risk of consumer harm in the operation of its business. These communication and technical assistance efforts provide bankers with tools to address issues that may pose risk of consumer harm.

References

FIL-75-2016: Final Guidance on the Uniform Interagency Consumer Compliance Rating System

Introduction

Financial institutions operate in a dynamic environment influenced by industry consolidation, convergence of financial services, emerging technology, and market globalization. To remain profitable in such an environment, financial institutions continuously assess and modify their product and service offerings and operations in the context of a business strategy. At the same time, new legislation may be enacted to address developments in the marketplace.

All these forces combine to create inherent risk. To address this risk, a financial institution must develop and maintain a sound compliance management system (CMS) that is integrated into the overall risk management strategy of the institution. Ultimately, consumer compliance should be part of the daily routine of management and employees of a financial institution.

This chapter discusses the elements of an effective compliance management system—Board of Directors (Board) and management oversight and the consumer compliance program.

Compliance Management System

A CMS is how an institution:

• learns about its consumer compliance responsibilities;
• ensures that employees understand these responsibilities;
• ensures that requirements are incorporated into business processes;
• reviews operations to ensure responsibilities are carried out and requirements are met; and
• takes corrective action and updates materials as necessary.

An effective CMS is commonly comprised of two interdependent elements:

• Board and management oversight; and
• Consumer compliance program

When both elements are strong and working together, an institution will be successful at managing its consumer compliance responsibilities and risks now and in the future.

Financial institutions are required to comply with federal consumer protection laws and regulations, and are ultimately responsible for such compliance including the use of third-party providers. Noncompliance can result in monetary penalties, litigation, and formal enforcement actions. The responsibility for ensuring that an institution and its third-party providers are in compliance appropriately rests with the Board and management of the institution. Therefore, every FDIC-supervised institution must have an effective CMS adapted to its unique business strategy.

Board and Management Oversight

The Board of a financial institution is ultimately responsible for developing and administering a CMS that ensures compliance with federal consumer protection laws and regulations. To a large degree, the success of an institution’s CMS is founded on the actions taken by its Board and management. Key actions that Board and management may take to demonstrate their commitment to maintaining an effective CMS and to set a positive climate for compliance include:

• demonstrating clear and unequivocal expectations about consumer compliance, not only within the institution, but also to third-party providers;
• adopting clear policy statements;
• appointing a compliance officer with authority and accountability;
• allocating resources to compliance functions commensurate with the level and complexity of the institution’s operations;
• anticipating and evaluating changes in the institution’s operating environment and implementing responses across impacted lines of business;
• identifying compliance risk in the institution’s products, services, and other activities, and responding to deficiencies and violations;
• conducting periodic compliance audits; and
• providing for recurrent reports by the compliance officer to the Board.

Leadership on consumer compliance by the Board and management sets the tone in an organization. The Board and management should discuss compliance topics during their meetings. They should include compliance matters in their communications to institution personnel and the general public. Institution management and staff should have a clear understanding that compliance is important to the Board and management, and that they are expected to incorporate compliance in their daily operations.

Policy statements on compliance topics provide a framework for the institution’s procedures and provide clear communication to management and employees of the Board’s intentions toward compliance.

Regardless of size or institution complexity, the first step Board and management should take in providing for the administration of the compliance program is the designation of a compliance officer. In developing the organizational structure of the compliance program, Board and management must grant a compliance officer sufficient authority and independence to:

• cross departmental lines;
• have access to all areas of the institution’s operations; and
• effect corrective action.

A compliance committee, as an alternative to or in addition to a full-time compliance officer, could be formed consisting of the compliance officer, representatives from various departments, and member(s) of management or the Board. However, the ultimate responsibility of overall compliance with all statutes and regulations resides with the Board.

A qualified compliance officer will have knowledge and understanding of all consumer protection laws and regulations that apply to the business operations of the financial institution. The compliance officer should also have general knowledge of the overall operations of the institution and interact with all of the departments and branches to keep abreast of changes (e.g., new products, services or business practices; personnel turnover) that may require action to manage perceived risk. In larger or more complex institutions the compliance officer may devote all of his or her time to compliance activities. In smaller or less complex institutions, where staffing is limited, a full-time compliance officer may not be necessary; instead, the compliance responsibilities may be divided between various individuals by type of regulation, such as loan-related or deposit-related regulations. In some instances, several banks may share a compliance officer.

A compliance officer’s general responsibilities, regardless of the size or complexity of the institution’s operations, include:

• developing compliance policies and procedures;
• training management and employees in consumer protection laws and regulations;
• reviewing policies and procedures for compliance with applicable laws and regulations and the institution’s stated policies and procedures;
• assessing emerging issues or potential liabilities;
• coordinating responses to consumer complaints;
• reporting compliance activities and audit/review findings to the Board; and
• ensuring that corrective actions are implemented in a timely fashion and are effective at preventing recurrence.

When more than one individual is responsible for compliance matters, responsibility and accountability must be clearly defined.

To be effective at overseeing compliance and maintaining a strong compliance posture, a compliance officer must be provided with ongoing training, as well as sufficient time and adequate resources to do the job. The compliance officer may utilize third-party service providers or consultants to help administer the compliance program or audit functions. However, the compliance officer should perform sufficient due diligence to verify that the provider is qualified, because ultimately the institution’s Board and management are responsible for identifying and controlling compliance risks arising from third-party relationships, to the same extent as if the third-party activity was handled within the institution.

If an institution engages the services of a third party, the Board and management must ensure that the third-party operations, products, services, and activities are reviewed for compliance with consumer protection laws and regulations. An effective compliance risk management process will vary depending on the complexity and risk potential of the third-party relationship, but generally includes risk assessment, due diligence in selecting the third-party provider, appropriate contract structuring and review, and sufficient oversight of third-party activities, including adequate quality control over products or services provided.

Consumer Compliance Program

A sound compliance program is essential to the efficient and successful operation of the institution, much as a business plan. A compliance program includes the following components:

• Policies and procedures
• Training
• Monitoring and/or Audit
• Consumer complaint response

A financial institution should generally establish a formal, written compliance program. In addition to being a planned and organized effort to guide the institution’s compliance activities, a written program represents an essential source document that will serve as a training and reference tool for all employees. A well planned, implemented, and maintained compliance program will prevent or reduce regulatory violations and provide cost efficiencies, and is a sound business step. However, a compliance program is not static. The compliance program must be dynamic and constantly amended on an ongoing basis to focus resources where they are needed most based upon risks to the institution.

It is expected that no two compliance programs will be the same, and that the formality of a program will be dictated by numerous considerations, including:

• institution’s size, number of branches, and organizational structure;
• business strategy of the institution (e.g., community bank versus regional; or retail versus wholesale bank);
• complexity of products and services offered;
• staff experience and training;
• type and extent of third-party relationships;
• location of the institution—its main office and branches; and
• other influences, such as whether the institution is involved in interstate or international banking.

The formality of the consumer compliance program is not as important as its effectiveness. This is especially true for small institutions where the program may not be in writing but an effective monitoring system has been established that ensures overall compliance. However, during periods of expansion or turnover of staff, a written compliance program becomes more important because individuals with the particular knowledge or experience may no longer be with the institution or available for contact.

Regardless of the degree of formality, all financial institutions are expected to manage their compliance programs proactively to ensure continuing compliance. Compliance efforts require an ongoing commitment from all levels of management and should be a part of an institution’s daily business operations.

Policies and Procedures

Consumer compliance policies and procedures generally should be described in a document and reviewed and updated as the financial institution’s business and regulatory environment changes. Policies should be established that include goals and objectives and appropriate procedures for meeting those goals and objectives. Generally, the degree of detail or specificity of procedures will vary in accordance with the complexity of the issue or transactions addressed.

An institution’s policies and procedures should provide personnel with all the information needed to perform a business transaction. This may include applicable regulation cites and definitions, sample forms with instructions, institution policy, and, where appropriate, directions for routing, reviewing, retaining, and destroying transaction documents. For example, loan application procedures should be established so that institution personnel consistently treat all applicants equitably and fairly. These procedures should incorporate and clearly convey to staff the regulatory requirements and the institution’s lending policy, including the institution’s nondiscriminatory lending criteria. Similarly, contracts with third parties should set clear expectations for adherence to relevant laws and regulations, and management should ensure that sufficient policies and procedures are in place to control the risks associated with a particular third party.

Compliance policies and procedures are the means to ensure consistent operating guidelines that support the institution in complying with applicable federal consumer protection laws and regulations, both directly and through the use of third-party providers. Also, these criteria will provide standards by which compliance officers and line managers may review business operations.

Training

Education of a financial institution’s Board, management, and staff is essential to maintaining an effective compliance program. Line management and staff should receive timely, specific, comprehensive training in laws and regulations, and internal policies and procedures that directly affect their jobs.

The compliance officer should be responsible for compliance training and establish a regular training schedule for Directors, management, and staff, as well as for third-party service providers, where appropriate. Training can be conducted in- house or through external training programs or seminars. Once personnel have been trained on a particular subject, a compliance officer should periodically assess employees on their knowledge and comprehension of the subject matter.

An effective compliance training program is frequently updated with current, complete, and accurate information on products and services and business operations of the institution, consumer protection laws and regulations, internal policies and procedures, and emerging issues in the public domain. For example, loan officers, as well as other front-line personnel regularly interacting with loan applicants, should be fully informed about the loan products and services offered by the institution and thoroughly knowledgeable about all aspects of the applicable consumer credit protection laws and regulations.

Monitoring and/or Audit

Monitoring is a proactive approach by the institution to identify procedural or training weaknesses in an effort to preclude regulatory violations.

An audit is an independent assessment and validation of an institution’s system of internal controls, operations, and compliance risk management framework. It complements the institution’s monitoring system. Audits can be performed internally or by an external entity, as long as the individuals that perform audit activities are independent of the areas being audited.

Every institution should have monitoring and/or audit functions that are appropriate for their size, complexity, and risk profile. Each function plays an important but different role in supporting a strong CMS. It should not be assumed that if an institution has a strong monitoring function in place, risks are appropriately mitigated. For many institutions, it is necessary to have both.

Monitoring:

An effective monitoring system includes regularly scheduled reviews of:

• disclosures and calculations for various product offerings;
• document filing and retention procedures;
• posted notices, marketing literature, and advertising;
• various state usury and consumer protection laws and regulations;
• third-party service provider operations; and
• internal compliance communication systems that update and revise the applicable laws and regulations to management and staff.

Institutions that include a compliance officer in the planning, development, and implementation of business propositions increase the likelihood of success of its compliance monitoring function.

Changes to regulations or changes in business operations, products, or services should trigger a review of established consumer compliance procedures. Modifications that are necessary should be made expeditiously to minimize compliance risk, and applicable personnel in all affected operating units should be advised of the changes.

Monitoring also includes reviews at the transaction level during the normal, daily activities of employees in every operating unit of the institution. This might include, for example, verification of an annual percentage rate, or a second review of a loan application, before the transaction is completed. Monitoring at this level helps establish management and staff accountability and identifies potential problems in a timely manner.

Compliance officers should monitor employee performance to ensure that they are following established internal consumer compliance policies and procedures. The frequency and volume of employee turnover at an institution should be factored into the schedule for reviews. Such reviews are especially critical after problems have been noted during past audits or examinations, regulation changes, new products are introduced, mergers occur, or when additional branch locations are opened.

Audit:

The Board of the institution should determine the scope of an audit and the frequency with which audits are conducted. The scope and frequency of an audit should consider such factors as:

• expertise and experience of various institution personnel;
• organization and staffing of the compliance function;
• volume of transactions;
• complexity of products offered;
• number and type of consumer complaints received;
• number and type of branches;
• acquisition or opening of additional branch(es);
• size of the institution;
• organizational structure of the institution;
• outsourcing of functions to third-party service providers, including a review of agreements signed or made between the institution and vendors;
• degree to which policies and procedures are defined and detailed in writing; and
• magnitude/frequency of changes to any of the above.

An audit may be conducted once a year, or may be ongoing where all products and services, all applicable operations, and all departments and branches are addressed on a staggered basis. An audit may be performed “in-house” or may be contracted to an outside firm or individual, such as a consultant or accountant. A financial institution that outsources the audit should make certain that the auditor is well-versed in consumer compliance, and that the audit program is based on current law and regulation, as well as comprehensive in scope. Generally, a strong consumer compliance audit will incorporate vigorous transaction testing.

Regardless of whether audits are conducted by institution personnel or by a contractor, the audit findings should be reported directly to the Board or a committee of the Board. A written consumer compliance audit report should include:

• scope of the audit (including departments, branches, product types and third-party relationships reviewed);
• deficiencies or modifications identified;
• number of transactions sampled by category of product type; and
• descriptions of, or suggestions for, corrective actions and time frames for correction.

Board and management response to the audit report should be prompt. The compliance officer should receive a copy of all consumer compliance audit reports and act to address noted deficiencies and required changes to ensure full compliance with consumer protection laws and regulations. Management should also establish follow-up procedures to verify, at a later date, that the corrective actions were lasting and effective.

Consumer Complaint Response

An institution should be prepared to handle consumer complaints promptly. Procedures should be established for addressing complaints, and individuals or departments responsible for handling them should be designated and known to all institution personnel to expedite responses.

Examiners should also discuss with management how complaints are identified and defined, as consumer inquiries may also highlight areas with increased risk of consumer harm and/or regulatory compliance concerns.

Complaints may be indicative of a compliance weakness in a particular function or department. Therefore, a compliance officer should be aware of the complaints received and act to ensure a timely resolution. A compliance officer should determine the cause of the complaint and take action to improve the institution’s business practices, as appropriate.

An institution should also monitor complaints to and/or about third parties that are providing services on behalf of the institution.

Introduction

The objective of the pre-examination planning process is to collect necessary information to understand an institution and the risks of consumer harm prior to the start of an examination.  This information allows the Examiner-in-Charge (EIC) and the examination team to plan and conduct the examination, to develop the scope of the examination, and to accomplish supervisory objectives in an efficient and effective manner.

This chapter discusses the three phases of the pre-examination planning process and usage of the Pre-Examination Planning System (FOCUS PEP), which is a web-based automated system used to generate the various pre-examination planning documents. The pre-examination planning process involves the following three phases:   

1. Information Package (IP)
2. Pre-Examination Planning Phase 1 (PEP-1)
3. Pre-Examination Planning Phase 2 (PEP-2)

Information Package (IP)

The examination planning process begins with the Field Supervisor (FS) or the Supervisory Examiner (SE) calling the institution’s management to inform them of the projected start date of the examination or visitation, explaining that an IP will be sent, and discussing how the IP will be provided.¹  The FS or SE submits the IP to the institution no less than 90 calendar days before the projected start date of the examination.² The IP is designed to increase banker awareness of the examination process prior to the examination; to promote open communication with examination staff; and to ensure that the institution’s management team knows what to expect during the examination and where to go in the event their expectations are not met. The FS or SE explains that the IP includes a list of interview questions, which will help the EIC develop an examination plan and an information and document request list tailored specifically to the institution’s activities.  The interview questions are provided early so the institution’s management team can prepare to discuss them with the EIC and can invite the appropriate persons to participate in the pre-examination interview that occurs several weeks before the examination start date.  The institution may elect to provide written responses to the pre-examination interview questions; however, the FS, SE, EIC, or other examination staff should not request or require written responses from the institution.

After contacting institution management, the FS, SE, or designee submits the IP to the institution according to the previously stated timing requirements.  To facilitate efficient and secure exchange of information, the FS or SE should determine the institution’s willingness to use applications, such as the Enterprise File Exchange (EFX), that provide a secure method for financial institutions to exchange information with the FDIC.³ When the institution is willing to use such applications, the FS, SE, or designee should initiate a session and electronically submit the IP to the institution.  When the institution is unwilling to use secure applications for the electronic exchange of examination-related information, the FS, SE, or designee should use an alternative delivery method (e.g., encrypted e-mail, express mail courier service) that meets the security measures discussed in the FDIC’s policies for the exchange, use, and storage of information.⁴  Each field office will establish procedures to ensure the FS, SE, or designee (1) provides the IP to the institution in a timely manner; (2) records the IP sent date in the System of Uniform Reporting of Compliance and CRA Examinations (FOCUS); and (3) if applicable, records any reasons for timing delays in FOCUS.

The IP module in FOCUS PEP is used to produce the IP, which includes a standardized introductory letter that provides an overview of the examination process; discusses various resources available that explain the examination process; identifies the appropriate communication channels for any concerns about the examination process or the resultant ratings; and provides contact information for the FS and/or the SE.

The IP letter has been standardized and automated within FOCUS PEP and should be consistently used by all field offices without changes.  A sample IP letter is included in this Manual (see Section III).  If electronically submitting the IP to the institution, the FS, SE, or designee should convert the IP letter to an Adobe portable document format (.pdf).   Supervisors should also follow any national or regional instructions governing the use of electronic signatures for examination-related documents.  In the absence of such instructions, a supervisor can either use his or her typed name as an electronic signature, using the same font as the body of the letter, or use Adobe’s “Fill & Sign” feature.

Lastly, as part of the examination planning process, the FS or SE schedules examiners for PEP-1 and PEP-2.  In particular, the FS or SE will select the EIC and schedule sufficient dedicated time for the EIC to conduct all activities of PEP-1 and PEP-2 prior to the examination start date.  As a general rule, the EIC (or Acting EIC) should conduct PEP activities to have sufficient time to learn about the institution and prepare an examination plan tailored to the institution’s areas of highest risk.  Other examiners may conduct PEP activities on a limited basis when scheduling conflicts arise or limited staffing resources exist. Additionally, if examiners other than the EIC will perform the CRA or fair lending reviews, then those staff members should be scheduled sufficient dedicated time, when possible, to perform CRA- and fair lending-related examination planning activities so that the results are available for the EIC’s review and consideration.

Data Validations:  For the largest Home Mortgage Disclosure Act (HMDA) reporters (over 500 LAR lines) and/or Community Reinvestment Act (CRA) reporters, validation testing should be conducted in advance of scheduled fair lending and CRA examinations.  This approach will allow the institution to resolve any data errors so the examination can proceed without significant delay.  In addition, validation testing must be conducted for HMDA Outlier reviews prior to the start of the examination.  For examinations of all other reporters, the validation testing will generally be conducted during the examination.  However, a field office has the option to perform a data validation prior to the examination start date for other institutions if the field office has sufficient resources to complete it.  The HMDA validations should be conducted following the FDIC HMDA validation procedures, considering the scale and complexity of the institution’s mortgage lending activities and an overall assessment of the institution’s prior practices and compliance risk profile. 

A HMDA/CRA Validation Letter is to be provided to institutions when data validations occur prior to any examination.  A data validation letter has been standardized and included in the IP module of FOCUS PEP and should be used consistently.  This letter is either sent with or after the IP to allow sufficient time for the data validation process.  The letter should be sent using the same secure delivery method established for providing the IP.  If HMDA Data Analysts will be used for the validation process, the FS or SE should communicate this with the institution, either verbally or in the letter.

Pre-Examination Planning Phase 1 (PEP-1)

The risk assessment of the institution begins during PEP-1.  Every institution has inherent risk based on strategic plans, products and services offered, past supervisory actions, business activity, and other factors. PEP-1 starts the process of identifying and documenting risk based on the institution’s structure, supervisory history, financial performance, and market area.  The various activities performed during PEP-1 are meant to promote critical thinking about the possible inherent risks in the institution being examined.

PEP-1 consists of the following activities:

• Gathering information about the institution from both internal and external sources;
• Contacting the institution to conduct the pre-examination interview (PEP interview);
• Preparing and sending the Entry Letter to the institution along with the Compliance Information and Document Request (CIDR) that primarily requests CMS-related information and documents; and
• Beginning Section 1 of the Assessment of Risk of Consumer Harm (ARCH) and Section 1 of the Fair Lending Scope and Conclusions memo (FLSC). This activity is optional during PEP-1. The ARCH and FLSC can be started to the extent possible and when time or examination scheduling permits; however, most work on the ARCH will occur during PEP-2 and most work on the FLSC will occur during PEP-2 and the examination.

The EIC should begin PEP-1 no less than 45 calendar days prior to the scheduled start date of the examination.  However, institutions must have at least 30 calendar days to complete the CIDR and provide requested documents.  Longer time periods may be necessary based on the institution’s size, resources, and complexity.  The EIC should communicate with the institution’s management during the PEP interview to determine a sufficient amount of time to provide the requested materials.  This timeframe is also discussed in the Entry Letter.

Gathering Available Information

The EIC should first concentrate on gathering as much of the information as possible from FDIC records and databases and from publicly available sources before obtaining information from the financial institution.  The following is a list of some key documents and information the EIC should obtain for review because of their relevance to the financial institution’s compliance posture.

FDIC Records and Databases

• Data Gathering Tool, which compiles institution, examination, supervisory, and financial information from multiple FDIC systems and databases;
• Prior ARCH, FLSC, and other information from FOCUS or the Regional Automated Document Distribution (RADD);
• Previous Reports of Examination (ROEs) and supporting workpapers for compliance, risk management, trust, and information technology;
• Prior corrective actions (such as restitution) and responses to ROEs;
• Supervisory plans (for large and/or complex institutions, or others, as available);
• CRA Performance Evaluations;
• Demographic data for CRA assessment area(s) or market area(s);
• Uniform Bank Performance Reports (UBPRs) and Reports of Condition and Income (Call Reports);
• FDIC monitoring reports;
• Complaint and correspondence files; and
• Applications in process.

External Sources

• Previous years’ HMDA and CRA data disclosure reports;
• Content of the financial institution’s website;
• Public records, such as securities filings;
• Newspaper or website articles that raise potential examination-related issues; and
• Community contacts (for CRA evaluations).

PEP Interview

The PEP interview questions are maintained in the Compliance Pre-Examination Request Package (C-PREP) module of FOCUS PEP and updated on a periodic basis.  The EIC will contact the institution and arrange a PEP interview to be conducted either by telephone, a secure communication platform (such as Microsoft Teams or another FDIC-approved system), or through an in-person discussion.  The purpose of the interview is to gather current information to understand the institution’s risk profile, size, complexity, and the types of products or services offered.  The interview questions are provided to the institution with the IP discussed previously. Staff cannot require the institution to provide written answers to the interview questions in advance.  If the institution elects to provide written answers, the EIC is still expected to conduct an interview to verify and clarify responses received.  While examiners cannot add, revise, or delete interview questions in FOCUS PEP, the EIC should tailor interview questions based on what is learned about the institution through the internal and external data gathering process.  This demonstrates that the EIC has performed research to become familiar with the institution.  The EIC should also ask any necessary follow-up or additional questions during the PEP interview to understand the institution’s profile and to determine inherent risk.

The EIC should also use the interview as an opportunity to answer the institution’s questions about the examination process and to discuss the timing and logistics of the examination, including anticipated on-site and off-site activities. Additionally, the EIC should determine the applicability of the FDIC’s e-Exam Policy, should confirm previously discussed electronic document/data access requirements and delivery method(s) with the institution’s management; and determine off-site examination capabilities.  If the institution does not image documents or has had difficulty creating scanned images of records needed for FDIC examinations, the EIC may consider alternative options such as conducting an on-site review of these records or visiting the institution to scan the documents.  The PEP interview also provides an opportunity to identify the institution’s staff members who will need to be available to the examination team during the examination.  This will allow the institution to take steps to ensure, to the extent possible, that those persons are available when needed.

Director Involvement:  During the PEP interview, the EIC should also inform management that members of the institution’s Board of Directors are welcome to participate in regularly scheduled meetings with examiners or to schedule individual meetings with the EIC, if desired.  The EIC should emphasize that such participation is purely voluntary and that a lack of participation will not be viewed negatively.  As stated in the memorandum announcing this initiative, “The primary objectives are to improve communication with outside Directors, increase Director knowledge of the examination process, provide an opportunity for Directors to discuss their views with examiners on banking-related matters, and give examiners the opportunity to gain further insight into the experience levels and leadership qualities of bank management.”

CIDR and Entry Letter

The C-PREP module in FOCUS PEP is used to produce the Entry Letter and Electronic Data Download Instructions and the CIDR.  These documents must be tailored, as appropriate, for each institution.

After conducting the information gathering and PEP interview outlined above, the EIC (or a designee with whom he or she communicates closely) is required to use C-PREP to customize and create the CIDR based on an institution’s products and services.  The interview responses must be input to FOCUS PEP to ensure the CIDR is tailored to request only what is necessary to conduct the examination.  C-PREP filters the CIDR to make available certain items based on the institution’s responses to the PEP interview questions.  The CIDR created during PEP-1 primarily requests information and documents to assess the CMS, as well as information and some documents to understand the characteristics of products or services offered.  The majority of transaction-level documentation will be requested during PEP-2.  The institution’s response to the initial CIDR will provide the EIC with enough information to properly scope the examination and to identify products, services, and regulations (PSRs) on the ARCH that exhibit inherent risk not sufficiently mitigated by the institution’s CMS (i.e., residual risks).  These residual risks will be the basis for requesting transaction testing-related documentation (e.g., disclosures and loan files) during PEP-2.  Also, requesting fair lending-related information through the CIDR will allow the examiner conducting the fair lending review to complete the majority of Section 1 of the FLSC prior to the start of the examination.  Thus, the EIC should ensure all applicable fair lending-related information is requested through the CIDR so the examiner conducting the fair lending review has access to this information during the scoping process.

When completing the CIDR and requesting items such as minutes, training records, or reports, the EIC indicates the timeframe for the review (e.g., since the previous examination, in the past year, in the last two years).  This will help the institution avoid the submission of voluminous information or data not relevant to the examination.  Additional information about how to use C-PREP can be obtained from the user guide available within FOCUS PEP.

The Entry Letter and CIDR should be provided to the institution in either a paper-based format or an electronic format using the secure delivery method previously established for the examination process.  As discussed previously, if electronically providing the Entry Letter to the institution, the EIC (or designee) should convert it to an Adobe portable document file (.pdf). The EIC (or designee) should also follow any national or regional instructions governing the use of electronic signatures for examination-related documents.  In the absence of such instructions, the EIC (or designee) can either use his or her typed name as an electronic signature, using the same font as the body of the letter, or use Adobe’s “Fill & Sign” feature.

The Entry Letter instructs the institution on how to deliver the materials to the EIC or examination team and in what format.  As previously discussed, institutions must have at least 30 calendar days to complete the CIDR and provide requested documents.  The timing of the request and the turnaround must ensure that the institution has sufficient time to assemble the requested information and the examination team has sufficient time to adequately review the materials.  The FDIC prefers the use of applications, such as EFX, that provide a secure method for financial institutions to exchange examination files and information electronically with the FDIC.  However, where appropriate and with supervisor approval, the EIC may visit the institution prior to the official start date either to pick up the documents or to review any documents that are confidential or too bulky to duplicate.

ARCH and FLSC – Section 1

The ARCH documents the scope of the examination and assists with prioritization of efforts, time, and resources toward those PSRs with the highest residual risk of consumer harm.  The FLSC documents the fair lending review conducted in accordance with the Federal Financial Institutions Examination Council’s Fair Lending Examination Procedures. After conducting the PEP interview and recording the institution’s responses in FOCUS PEP, the ARCH and FLSC can be created in FOCUS PEP.  In an effort to make the PEP process more efficient, Section 1 of the ARCH and FLSC have been coordinated with and linked to the PEP interview.  Several responses for Section 1 of the ARCH and FLSC will pre-populate based on what is entered into C-PREP from the PEP interview.  However, the EIC should review the pre-populated questions and answers to ensure they are correct.

The EIC has the option to begin Section 1 of the ARCH and FLSC during PEP-1 using available information gathered.⁵ A series of questions helps document various risks identified during examination planning. The ARCH was developed to engage examiner’s critical thinking skills and to focus examination resources on areas presenting the highest degree of consumer harm risk.  Additional information about preparing the ARCH is included in this Manual (see Section II – Review and Analysis).  Examiners can also find information about how to use the ARCH and FLSC modules in the user guides available within FOCUS PEP.

Pre-Examination Planning Phase 2 (PEP-2)

During PEP-2, the EIC will conduct an initial assessment of the institution’s CMS to determine how effective the CMS is in identifying, addressing, and mitigating the potential for consumer harm.  This information will primarily be obtained from the institution’s responses to the PEP interview and the CIDR.  The EIC will continue the process of identifying and documenting inherent risk during PEP-2 based on the institution’s business model and operations. The areas that indicate a moderate or high level of potential consumer harm risk not mitigated by the strength of the CMS will potentially require further evaluation during the examination. In PEP-2, the EIC will finalize the ARCH examination scope and establish specific areas for review or transaction testing.

PEP-2 consists of the following activities:

• Reviewing the CIDR responses and requested items;
• Completing the ARCH and completing the majority of FLSC Section 1;
• Requesting additional documents for PSR transaction testing or the fair lending review; and
• Getting the ARCH approved.

Supervisors will ensure sufficient time is scheduled prior to the examination start date for PEP-2.  The amount of time needed to complete PEP-2 will vary based on the size and complexity of the institution.  Each field office will establish procedures to ensure that PEP-2 starts early enough to provide sufficient time for the institution to gather additional documents for transaction testing. 

Review CIDR Responses and Requested Items

The EIC and examination team will review the information and documents provided by the institution in response to the CIDR.  If documents necessary to complete the ARCH or to assess fair lending risk, such as Board meeting minutes or monitoring/audit reports, are not provided in response to the CIDR, examination team members may go to the institution during PEP-2 to review this information as time, resources, and travel requirements permit.  Follow-up contact with the institution’s personnel during PEP-2 is encouraged to properly answer any questions and to determine the most appropriate examination scope.

ARCH Completion and Completing Majority of FLSC Section 1

Based on the information provided by the institution, the EIC will complete the ARCH. This will involve finalizing Section 1 of the ARCH, as necessary, but will primarily involve completing Sections 2, 3, and 4.  Section 3 of the ARCH has also been coordinated with and linked to the PEP interview and the majority of responses will pre-populate.  The EIC will identify the PSRs that warrant transaction testing and any additional documentation needed for the examination.  Also, based on the fair lending-related information obtained through the CIDR, the examiner conducting the fair lending review should be able to complete the majority of Section 1 of the FLSC prior to the start of the examination.  Additional information about completing the ARCH is included in this Manual (see Section II – Review and Analysis).

Transaction Testing (TT) Request

The EIC will prepare and send a TT Request to the institution based on the scope of the examination and has the option of using the C-PREP module to develop it.  The fair lending examiner may work with the EIC to determine if additional fair lending-related documents need to be requested.

Documents requested during PEP-2 will largely be transaction-level documentation such as loan files, disclosures, notices, periodic statements, or system parameters, needed for the anticipated examination scope and the CRA, HMDA, and fair lending reviews.  When requesting these documents, the EIC indicates the timeframe for the review period (e.g., since the previous examination, in the past year, in the last two years) and the sample sizes.  This will help the institution avoid the submission of voluminous information or data not relevant to the examination.  These items will generally be made available electronically through the use of secure applications like EFX or other off-site examination tools, as agreed to by the institution and the EIC, or held at the institution for the examination.

The EIC will provide the TT Request to the institution’s designated contact, using the secure delivery method previously established for the examination process.  Based on the size, complexity, and resources of the institution, examiner judgment should be exercised regarding the approximate number of days the institution needs to gather the requested documents.  Additionally, it is important that the EIC communicate to the institution which documents are needed at the start of the examination.  This communication will help the institution prioritize the TT Request and allow the institution additional time to gather lower priority documents during the examination.

If the ARCH is changed to add a PSR subsequent to sending the TT Request to the institution, the EIC has the option to request necessary documents for the additional PSR(s) after the examination starts instead of sending another TT Request. If, however, a PSR is deleted after sending the TT Request to the institution, the EIC should discuss this during the entrance meeting with the institution’s management team and explain why the area will not be reviewed.

ARCH Approval

The EIC will finalize the ARCH using information obtained during PEP-2 to determine residual consumer harm risk and to establish the scope of the compliance examination. The completed ARCH will be submitted to the FS and all appropriate SEs to ensure that all territory managers can access the ARCH for review and approval.  Each field office will establish procedures to ensure the ARCH is approved by the appropriate FS or SE prior to the examination start date.

If information is discovered during the examination that requires material changes to the originally approved ARCH, the EIC describes the changes in a scope amendment that is submitted to the FS and all appropriate SEs for review and approval. Material changes are generally defined as a PSR change.  This may occur when the EIC determines an approved PSR will not be reviewed or when the EIC identifies a new PSR not identified during PEP.

PEP Record Retention

To ensure consistency in record retention, PEP documents should be maintained as follows:

• The IP, HMDA/CRA Validation, and Entry letters should be stored in the correspondence folder in RADD;
• PEP interview questions and answers should be completed within C-PREP and the completed document maintained as an examination workpaper in RADD;
• The completed CIDR with institution responses should be retained as an examination workpaper in RADD;
• The final, approved ARCH should be stored as an examination document in FOCUS;
• The TT Request list should be retained as an examination workpaper in RADD; and
• The final, approved FLSC should be stored as an examination document in FOCUS.  Note:  Any supporting documents used in the fair lending review should be retained in accordance with DCP’s Standardized Workpaper Job Aid:  FOCUS vs. RADD Minimum Documentation Requirements.

Introduction

The FDIC’s consumer compliance examination process assesses how well a financial institution manages compliance with federal consumer protection laws and regulations. The review period or scope typically covers bank activities conducted over a discrete period of time from the start date of the prior examination through the start date of the current examination. The review and analysis phase of the consumer compliance examination starts with a top- down, comprehensive evaluation of the compliance management system (CMS) used by the financial institution to identify, monitor, and manage its compliance responsibilities and risks. The procedures outlined below guide the examiner through an assessment of an institution’s CMS and assist the examiner in identifying specific areas of weakness for further analysis. Many procedures listed in this section can be performed at the field office or other location prior to the start of the examination, if materials are available.

Off-Site Review and Analysis

The Examiner-in-Charge (EIC) reviews and analyzes the material gathered from FDIC, third parties, and the institution in response to the Compliance Information and Document Request (CIDR) in order to develop the scope memorandum and plan the examination. This review and analysis should be broad enough to obtain an understanding of the organizational structure of the institution, its related activities, and compliance risks associated with each of its activities.

The review should be used to preliminarily determine whether the institution’s Board of Directors (Board) and management identify, understand, and adequately control the elements of risks facing the financial institution. In general, management and Directors are expected to have a clearly defined system of risk management controls governing the institution’s compliance operations, including those activities conducted by affiliates and third-party vendors. During this review the EIC should consider what types of questions should be asked during the examination to test whether the institution’s written policies and procedures accurately reflect actual operations.

Risk Scope Memorandum

The goal of a risk-focused, process-oriented examination is to direct resources toward areas with higher degrees of risk of consumer harm. To accomplish this goal, the examiner must assess the financial institution’s CMS as it applies to key operational areas and evaluate the risk of non-compliance with applicable laws and regulations. This process is documented by the examiner in a scoping memorandum, the Assessment of Risk of Consumer Harm (ARCH), which is reviewed and approved by the supervisor. The ARCH is developed during the pre-examination planning process and utilizes historical data, information obtained from the interview with the institution, and documents and information submitted by the institution in response to the CIDR. The ARCH describes the focus of the examination, including issues to be investigated and the products, services, or regulations that exhibit inherent risk not sufficiently mitigated by the institution’s CMS. The identified areas with residual risk will be further reviewed or transaction tested during the examination.

During the examination, the EIC should obtain approval for any material changes to the scope of the examination. The EIC describes the changes in a scope amendment that is submitted to the Field Supervisor and all appropriate Supervisory Examiners for review and approval.

The final ARCH should be posted to the System of Uniform Reporting of Compliance and CRA Examinations (FOCUS), making it available to all staff and management during the exam review and for future internal use, especially for the start of the subsequent examination.

Developing a Risk Profile

Every institution has inherent risk based on strategic plans, products and services offered, past supervisory actions, business activity, and other factors. The ARCH will document the identified areas of inherent risk by considering the following:

• Institution Structure:
  • Significant factors or changes
  • Mergers or acquisitions
  • Significant growth since prior examination
  • De Novo status
• Supervisory History:
  • Current and past enforcement actions
  • Reimbursement history
  • History of compliance with fair lending laws and regulations
  • Current and prior regulator ratings and supervisory recommendations
  • Consumer-related litigation
  • Consumer complaints
• Operational Areas - Product/Service/Regulation (PSR) Risk:
  • Major product lines
  • New or revised products/services/regulations
  • Applicable regulations
  • Recent case law
  • Growth in operations
  • Complexity of operations
  • Third party affiliations

Institution Structure: A key component of a financial institution’s risk profile is its structure and business model. An examiner will consider the nature and complexity of, or any changes to, the organizational, management, and ownership structure; business strategy; market areas and customers served; delivery channels; any subsidiaries or affiliates that offer products or services or support operations; branching activities; any unique or niche characteristics; and any significant changes in the institution’s balance sheet composition or income.

Supervisory History: The financial institution’s past consumer compliance performance is an important consideration when developing its risk profile. Historic effectiveness of the CMS, including the results of previous examinations and management’s record of taking corrective measures, will impact its risk profile and ultimately the scope of the examination. The most recent consumer compliance history should be given the most weight. The EIC will be able to locate performance risk information in various areas, including the FDIC’s correspondence and enforcement records for the subject institution. The most recent Risk Management report and workpapers may contain additional information on the institution’s performance risk (e.g., comments regarding institution management).

Operational Areas – PSR Risk: The nature and scope of a financial institution’s activities is a critical consideration in the identification of inherent risk. PSR risks can exist in the following operational areas:

• Lending
• Deposits
• Retail Investment and Insurance Sales
• Privacy and Consumer Information
• Advertising, Marketing, and Social Media
• Debt Collection
• Third-Party Relationships
• Other Products
• Other Regulations or Supervisory Guidance

The institution’s products and services impact the institution’s risk depending upon the financial institution’s size, market share, and portfolio concentration. The complexity of products offered and the associated likelihood of error should be considered. Third-party relationships can present heightened risk, particularly for product delivery, but also for any operation, product, service, or activity provided or conducted by a third party on behalf of the institution. Finally, the institution’s strategic plan for growth and for the introduction of new products or services should also be taken into account.

Regulation risk measures the possible consequences to the institution and its customers of noncompliance with specific regulatory provisions. Regulation risk recognizes that the impact of noncompliance differs depending on the consumer law or regulation. For the public, it is the measurement of relative adverse financial impact or other harm that noncompliance may produce. For the institution, regulation risk is the measurement of legal, and financial harm that noncompliance may produce. For example, the financial harm both to the institution and to consumers associated with violations of the Truth in Lending Act (Regulation Z) requiring reimbursements far exceeds the consequences of an isolated undocumented check hold. The level of regulation risk is affected by such factors as:

• Potential financial harm to consumers;
• Potential legal, and financial harm to an institution;
• New laws, regulations, or amendments thereof; and
• The amount of transaction activity subject to a specific regulation.

In order to properly assess a financial institution’s risk, the EIC or designee also reviews the following aspects of the CMS, which may or may not mitigate the identified inherent risks:

• Board and Management Oversight
• Compliance Program
  • Policies and Procedures
  • Training
  • Monitoring and/or Audit Procedures
  • Complaint Response

Taking into consideration the conclusions drawn in each of the preceding components, and any other pertinent information, the examiner should identify and assess the inherent risk within the institution’s PSRs. When the institution’s inherent risk is not sufficiently mitigated by its CMS, residual risk is present. To develop a risk profile of the institution and set the examination scope, the examiner should keep the risk scoping formula in mind (Inherent Risk– Mitigating Factors =Residual Risk).

The areas with residual risk should be further reviewed or transaction tested during the examination. The result of the EIC’s assessment of risk and the specific issues to be investigated and areas to be targeted with transaction testing should be addressed in the ARCH, which is discussed in the next section.

It is important to remember that one element of a financial institution’s consumer compliance efforts may influence another area. Be aware of relationships and their mutual impact. For example, if the initial review of institution practices identifies a lack of audit of loan denials, the examiner should look to see whether monitoring procedures are in place to mitigate the impact of the lack of audit procedures. The existence of monitoring procedures may lead the examiner to determine that the absence of an audit does not raise the institution’s risk profile. Conversely, if the initial review of institution policies and procedures identifies well-organized, appropriate, and up-to-date written guidelines for deposit compliance management, the examiner should also consider the institution’s record of oversight in this area. If deposit compliance has historically suffered from poor management oversight, then the existence of written procedures should be given less weight when determining the risk profile. It is important to accurately identify inherent risk and weight any mitigating factors that reduce the risk. This process requires the use of sound examiner judgment.

Developing the ARCH

The EIC should begin the risk scoping process by gathering information about the institution from both internal and external sources. The EIC uses information, such as prior consumer compliance and risk management reports of examination, correspondence, and available complaint information, to prepare for the pre-examination planning interview with the institution. Once the pre-examination planning interview is complete and the institution provides responses to the CIDR, the EIC can complete the ARCH. Follow-up contact with institution personnel during pre-examination planning is encouraged, if warranted, to properly determine the most appropriate examination scope.

The ARCH is divided into five sections and begins with an overview of the institution and examination, including current examination information, financial data, and previous examination supervisory comments. Examiners start the risk assessment process by describing the institution's structure and supervisory history in Section 1, followed by an initial assessment of the CMS in Section 2. Examiners identify inherent risks in Section 3 by answering a series of questions about the institution's operations, followed by an analysis of whether each inherent risk is low, mitigated, or results in residual risk of consumer harm. Examiners identify areas that result in residual risk as a PSR that will be reviewed as part of the scope of the examination. The PSRs are summarized in a table in Section 4, where examiners also document additional scope information. Sections 1-4 should be completed and approved by a supervisor or delegated designee prior to the start of the examination. Section 5 should be completed and approved if material changes to the scope of the examination are warranted.

Examiner judgment is a critical aspect of properly evaluating an institution’s risk profile. The ARCH allows examiners to use their judgment to focus and prioritize resources on areas (products, services, or regulations) that present the highest risk of consumer harm. The questions in the ARCH do not cover every potential risk but rather set out a basic framework to assist examiners in assessing and documenting an institution’s risk of consumer harm. Examiners are not limited to these questions and should consider all relevant facts when evaluating the institution’s risk profile.

The ARCH is completed within DCP’s Pre-Examination Planning System and the final, approved ARCH must be uploaded and maintained in FOCUS.

Examination Activities: On-site and Off-site Decisioning:

The FDIC has established standard consumer compliance consideration factors to ensure consistency in local decision-making when determining which examination activities should be completed on-site versus off-site. Each examination will be tailored to the risks identified during the planning process; however, all examinations are expected to have an on-site presence. This risk- focused approach encourages flexibility in application and relies on examiner judgment (in consultation with field management) to conduct the most effective and efficient examination that facilitates examiners assessing institutions’ compliance with consumer protection laws and the Community Reinvestment Act. The appropriate mix of on-site and off-site examination activities will depend upon many factors, including the bank’s business model, risk profile, and complexity; loan file imaging and technological capabilities; institution space/working accommodations; banker feedback; training needs; on-site/off-site plans of RMS and other agencies (CFPB, state authority, etc.), when applicable; ability to collaborate on joint activities; and the need to establish ongoing and effective communication with bank management at each examination, among other considerations. The list below provides a general outline of certain examination activities that can be conducted on-site or off-site. However, examiners should consider the risk profile of the institution and the other factors provided above when determining which activities should be performed on-site versus off-site. When making determinations regarding off-site activities, examiners should further assess the aforementioned factors to decide whether to perform such activities in a field office or virtual environment.

NOTE: The activities listed below are not intended to be all-inclusive, nor is this direction meant to limit or constrain examiner judgment in conducting on-site activities when warranted.

Examiners may perform the following portions of the examination off-site, keeping in mind the risk profile of the institution:

• Conducting pre-examination planning and scoping activities
• Completing portions of low-risk fair lending and Home Mortgage Disclosure Act (HMDA) reviews
• Conducting portions of Community Reinvestment Act (CRA) evaluations, particularly for Small Banks and Intermediate Small Banks
• Reviewing policies/procedures; Board/committee packages and meeting minutes; risk assessments; and audit reports/workpapers
• Utilizing Regional Office and Washington Office specialist and Subject Matter Expert resources, including consumer compliance technology specialists, fair lending examination specialists, examination specialists, and other exam team members for out-of-territory exams when their assistance doesn’t require being on-site
• Reviewing loan files and deposit disclosures to the extent technology allows
• Completing training benchmarks where on-site performance is not necessary for effective training or clearly not required
• Training for large groups of pre- or newly-commissioned examiners via a training team [note: collaborative spaces in the field office can serve as an effective forum for group training sessions]
• Assessing and transaction testing for portions of lower-complexity/lower- risk areas
• Reviewing online bank systems, such as e-OSCAR, rewards checking, automated overdraft programs, credit bureau reporting, and escrow account administration, unless technology limitations require on-site review
• Writing the Report of Examination and finalizing examination workpapers

Examiners are generally expected to perform the following portions of the examination on-site:

• Conducting key meetings, including exit/Board meetings, and significant conversations with bank officers about potential consumer harm, possible downgrades, enforcement actions, significant fair lending discussions (e.g. criteria interviews), Unfair or Deceptive Acts or Practices concerns, and the CMS interview for higher-risk institutions.
• Training and instilling FDIC culture for pre-commissioned examiners and interns [note: this can be done with a combination of off-site in the field office and on-site at the bank]
• Observing situations that could lead to further investigation/examination activities (e.g. detecting internal control weaknesses, potential fraud, dominant officer situation, etc.)

• Training on first-time significant benchmarks to provide a more collaborative and hands-on development experience

  [note: the trainee and coach should generally work on-site together, in the bank and/or field office, as appropriate, while completing the benchmark]

• Working side-by-side for Acting EIC assignments [note: Signing EIC and Acting EIC should be together to complete relevant portions of the exam for the EIC to observe and coach the Acting EIC on examination oversight either in the bank and/or field office]
• Conducting transaction testing for high-risk PSRs, or when remote access is not available

Examination Review and Analysis

Throughout the review and analysis phase of the examination, the examiner should have discussions with management, the compliance officer, Directors, and other personnel to develop an understanding of how management approaches its consumer compliance responsibilities. These discussions will enable the examiner to determine whether and to what extent the financial institution has a CMS that is integrated into its daily operations.

Entrance Meeting with Senior Management

During the pre-examination planning stage, the EIC should schedule a meeting with senior management (e.g., the president, chief executive officer, compliance officer, and if they wish, members of the Board). This meeting should take place as soon as possible after beginning the examination and should facilitate the discussion of various administrative items and the scope of the examination. Matters to be discussed during the entrance meeting include:

• An overview of the examination process, including the use of information collected during pre-examination planning and its impact on the scope of the examination
• The names of FDIC examiners on the examination and whether they will be working on-site or off-site
• Anticipated length of the examination
• Activities expected to be conducted on-site and off-site, and communicating that adjustments may be made based on risk
• The EIC’s accessibility throughout the examination to discuss any issues relating to the examination and/or FDIC policy and practices and communication preferences
• The identity of the individual(s) who is/are the primary contact person(s) for examination related issues and communication preferences for both on-site and off-site examiners
• Any issues identified during off-site review and analysis, particularly areas of significant risk of consumer harm that will be receiving close attention
• The materials requested during pre-examination planning that were not provided by the financial institution prior to the examination start date
• An explanation of the closing management meeting procedures
• The date of the next Board/trustees meeting (Management should be advised that depending upon the examination findings, the FDIC may need to attend the regularly scheduled meeting or call for a special Board meeting.)
• Any issues related to the CRA evaluation and fair lending review

Examiners should use a written agenda to document the issues covered at the entrance meeting, and file a copy in the examination workpapers

Ongoing Communication

Communication between financial institution management, Board, institution staff, and FDIC examination staff is a major component of an effective examination or visitation. Open communication should be maintained with management during the course of the examination. To the extent possible, all issues of concern should be discussed with management as they arise. This allows management time to provide additional relevant information or to begin correcting problems where appropriate.

The financial institution’s Directors/trustees are encouraged to participate in regularly scheduled meetings with examiners. However, examination findings should be discussed with management prior to discussing with Board members. Also, the EIC should notify the financial institution’s management as early as possible of any plans to meet with the Board to present examination findings. This will provide Directors/trustees with an opportunity to forego meetings during the examination, if that is their preference.

Review of the CMS

Based on information gleaned from the discussions with institution management and staff, along with the off-site review and analysis, the examiner should:

• Determine the quality of the institution’s CMS, including the degree to which management has taken a proactive approach to compliance and whether management can demonstrate its ability to assure compliance with federal consumer laws and regulations
• Assess whether the CMS is effective at facilitating compliance
• Identify potential deficiencies in the CMS and areas of greatest risk of consumer harm
• Determine where transaction testing is necessary

The following sections include question lists that are intended to serve only as general guidance for the matters to be addressed during the examiner’s dialogue with institution personnel. The sections are organized by elements of the CMS and should be considered in conjunction with each of the different operational areas of the institution to come to a conclusion about the strength of each element overall. The questions will not apply to every examination scenario and should be customized to each situation. Examiner judgment must be used to determine whether additional pertinent questions should be asked. Because all the facets of a CMS are interrelated, certain themes will be repeated in the question lists for multiple sections. Throughout the examination process, the examiner should refer to the FDIC Laws, Regulations, and Related Acts as well as any pertinent outstanding FDIC guidance regarding the regulatory or policy requirements of each area under review.

NOTE: The Examination Checklists/Workpapers are not to be given to institution management to complete.

Applicable Statutes and Regulations

The CMS must adequately address (through oversight, policies and procedures, training, monitoring and/or audit, and complaint response) all areas related to the following Federal consumer laws, regulations, rules, and policy statements:

Lending

Truth in Lending

Real Estate Settlement Procedures

Homeowners Protection

Equal Credit Opportunity

Fair Housing

Home Mortgage Disclosure

Flood Insurance

Preservation of Consumers’ Claims and Defenses

Homeownership Counseling

Servicemembers Civil Relief Consumer Leasing

Military Lending Act

Secure and Fair Enforcement for Mortgage Licensing

Protecting Tenants at Foreclosure

Deposits

Truth in Savings

Electronic Fund Transfers

Expedited Funds Availability

Garnishment of Accounts Containing Federal Benefit Payments

Part 360 – Resolution and Receivership Rules

Non-Deposit Products

Investment Sales/Recordkeeping

Broker/Dealer Rules and Exemptions (Regulation R)

Consumer Protection in Sales of Insurance

Other Products or Issues

Advertisement of Membership Electronic

Banking

Privacy of Consumer Financial Information Fair

Credit Reporting Act, including FACTA Fair

Debt Collection Practices

Right to Financial Privacy

Children’s Online Privacy Protection

Unfair or Deceptive Acts or Practices

Telephone Consumer Protection

Controlling the Assault of Non-Solicited Pornography and Marketing

Third-Party Risk

Overdraft Payment Programs

Community Reinvestment Act (CRA)

CRA Technical Requirements

Branch Closings

Interstate Banking and Branching

Evaluating Management Oversight

Material to be reviewed during completion of this section will include, at a minimum:

• The examiner-determined risk profile of the financial institution as it relates to management oversight
• Prior Reports of Examination, including Consumer Compliance, Risk Management, and specialty examinations (with a focus on the management component of each)
• Minutes of the meetings of the Board, Compliance Committee, Discount Committee, etc.
• New, modified or amended compliance-related policies, procedures, and other internal memoranda
• All files related to the receipt and resolution of compliance- related consumer complaints archived by the institution or the FDIC, including information from the FDIC’s automated complaint tracking system managed by the FDIC’s Consumer Response Unit
• Written management and Board response and follow-up to internal monitoring and to internal and external audits, if applicable
• Agreements with third parties to provide products or services, such as an outside vendor to provide compliance services and educational materials or with a networking broker/dealer to provide brokerage services
• Institution organizational chart and management résumés
• Examiner notes from discussions with the compliance officer, managers, etc.

Procedures

1. Review Board and committee meeting minutes. Review of these documents should give the examiner an indication of the following:

• Extent of Board oversight/involvement in assuring compliance with consumer protection and fair lending laws and regulations by the institution and, as applicable, by third-party providers
• Training of Directors and management regarding consumer compliance and fair lending issues
• Rationale for implementing new policies or procedures or modifying existing ones
• Any negative comments on rejected loan applications during Loan Committee or any other meeting (such records must be traced to the specific loan file to assure that no unlawful disparate treatment or discrimination was involved in the denial)
• Consideration of new loan or deposit products and strategies for their implementation
• Consideration of new software or software vendors
• Consideration of third parties for compliance audit, if applicable
• Approval of, and rationale for, branch openings and closings
• Whether the Board documented a review of the prior Consumer Compliance Report of Examination (ROE) that included, as applicable: a discussion of recommendations for policy changes, an adoption of those revisions, and a report regarding corrective action and subsequent testing for identified violations

2. Based on the material reviewed during pre-examination planning and the examination, and based on discussions with management, answer the following questions:

• What is the institution’s business strategy and what are the compliance implications of that strategy (for example, elevated risk due to rapidly growing subprime lending, cutting-edge e-banking activities, etc.)?
• What particular compliance-related areas does management feel are weak or in need of review?
• Have the Board and management worked to foster a positive climate for compliance?
• Has management allocated the appropriate level of resources to compliance?
• Does the institution have a designated compliance officer and/or Compliance Committee? If not, is the absence of an officer or committee significant in light of the institution’s resources and risk profile?
• Has management ensured that the compliance officer(s) and/or Compliance Committee has the appropriate level of authority and accountability to effectively administer the institution’s CMS?
• Has management responded appropriately and promptly to consumer complaints?
• Has management responded appropriately to deficiencies noted and suggestions made at previous examinations and audits?
• How does management stay abreast of changes in regulatory requirements and other compliance issues? Is this method appropriate in light of the institution’s resources and risk profile?
• How does management ensure that the institution’s staff stays abreast of changes?
• How does management ensure that compliance is considered as part of new product and service development, marketing, and advertising?
• How does management ensure that due diligence is performed prior to changing third-party product or service providers, such as software vendors or third-party audit providers?
• What is the level of management’s knowledge of compliance issues?
• Does the review of the Board and/or Compliance Committee minutes indicate a reasonable level of Board involvement?
• Is the Board aware that it is ultimately responsible for the institution’s CMS?

3. Develop and document a preliminary assessment of the institution’s performance related to this area. Is management oversight generally strong, adequate, or weak? On what is this assessment based?

Evaluating the Consumer Compliance Program

Policies and Procedures

Examiners are to determine whether the institution’s policies and procedures are appropriate to the risk in the products, services, and markets of the institution. Material to be reviewed during completion of this section will include, at a minimum:

• The examiner-determined risk profile of the financial institution as it relates to policies and procedures, including the institution’s business strategy, product offering, branches, third party relationships, etc.
• Compliance-related policies and other written compliance procedures
• Board minutes, Compliance Committee minutes, and other committee minutes, as applicable
• Examiner notes from discussions with the compliance officer, senior managers, etc.

Policies and procedures, whether written or unwritten, should cover all of the areas listed below. A financial institution may have other policies or procedures related to compliance not listed here that should be included in the examiner’s review, depending on the institution’s activities and risk profile.

• Compliance Policy – This may be a single document or a compilation of various documents each relating to specific areas of institution activity. In addition to specific guidance on daily compliance activities, the policy should provide for an adequate level of responsibility and authority for the compliance officer, Compliance Committee, and individual employees.
• Lending – Often, institutions will have separate policies for various lending types such as consumer, real estate, commercial, agricultural, etc. All should be reviewed during pre-examination planning.
• Deposits – Institutions often have separate policies for Regulation DD, Regulation E, Regulation CC, and Part 329.
• Electronic Banking – The adequacy of e-banking policies should be assessed in light of the level of activity in which the institution is engaged.
• Privacy – Institution privacy policies and procedures vary widely, depending on the level of information sharing involved.
• Non-Deposit Products – Policies and procedures must provide adequate guidance for the sale of investment and insurance products by institution employees (including loan officers who sell insurance during the loan process), dual employees, and on-site non-employee brokers.
• Branch Closing Policy – Section 42 of the Federal Deposit Insurance Act requires every financial institution that has one or more branch locations to maintain a branch closing policy.
• Truth in Lending Policy – Applicable to institutions as defined under section 1503(3) of the SAFE Act, 12 U.S.C. 5102(3). These may be incorporated into the Loan Policy or as stand-alone policies. For these institutions, written policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the depository institution and its subsidiaries. They specifically must address lender compensation, prohibition on steering, and the requirements under the SAFE Act.
• Fair Credit Reporting Act – Policies and procedures must provide adequate guidance for the adequate reporting of consumer information, complaint resolution of consumer information, and safeguarding of consumer information.
• Overdraft Programs – Institutions providing overdraft programs should adopt written policies and procedures adequate to address the credit, operational, and other risks associated with these types of programs.

In order to ensure an accurate assessment of the institution’s CMS, each policy and procedure must be reviewed during pre- examination planning or the examination unless all the following are true:

1) The policy was reviewed at the prior FDIC consumer compliance examination

2) The review of the policy at the prior examination found no deficiencies

3) No changes or amendments have been made since the policy was last reviewed

4) There have been no significant regulatory or operational changes pertinent to the area covered by the policy since the prior examination.

1. Conduct sufficient documentation reviews and management discussions to answer the following questions.

• What areas of compliance do the written policies or procedures cover?
• Which policies or procedures are unwritten?
• Is the use of unwritten policies/procedures adequate for the institution’s needs?
• Do the policies give effective guidance to institution employees?
• Are policies and procedures structured and implemented in such a way as to ensure fair and equitable treatment of all consumers?
• Do the policies assign compliance responsibility? Are the assignments logical and reasonable given the time and resources available to those employees?
• Do the policies provide appropriate authority to employees responsible for identifying and correcting deficiencies?
• Are the policies and procedures established in such a way as to ensure a smooth transition in the case of key personnel turnover?
• Are policies, procedures, and standardized forms periodically reviewed and updated in response to regulatory changes and changes in the institutions risk profile? How frequent are the reviews?
• Does the Board review and approve all changes to policies and procedures? If not, is the level of approval appropriate given the examiner-determined institution risk profile?
• Are there any practices that have become policy by virtue of the frequency of their occurrence? If so, do these practices conflict with formal policies or procedures?

NOTE: Additional guidance for the review of loan and appraisal policies is located in the Fair Lending Examination Procedures.

2. Determine whether the institution’s policies and procedures provide the appropriate level of guidance for all employees and include clearly defined goals and objectives.
3. Develop and document a preliminary assessment of the institution’s performance related to this area. Are policies and procedures considered generally strong, adequate, or weak? On what is this assessment based?

Training

Examiners will determine whether consumer compliance training is current and tailored to risk of the institution and staff responsibilities. Material to be reviewed during

completion of this section will include, at a minimum:

• The examiner-determined risk profile of the financial institution as it relates to training
• Compliance-related training documentation
• Examiner notes from discussions with compliance officer, managers, etc.

1. Review the institution’s training records and have sufficient discussions with management to answer the following questions:

• Does every employee receive appropriate training given his or her compliance responsibilities?
• Do third party service providers receive appropriate training?
• How often is training conducted? Is the frequency of training acceptable?
• Is the training program continuously updated to incorporate accurate, complete information on new products and services, regulatory changes, emerging issues, etc.?
• Is the effectiveness of the training evaluated by management through delayed testing, before-and-after work product reviews, or other means?
• Regardless of whether staff training is conducted primarily in-house or is out-sourced, does management evaluate whether the institution’s training needs are being met? As EIC, do you agree or disagree with management’s conclusions?

2. Develop and document a preliminary assessment of the institution’s performance related to this area. Is the institution’s training considered generally strong, adequate, or weak? On what is this assessment based?

Monitoring and/or Audit

Examiners should determine the sufficiency of the monitoring and, if applicable, audit to encompass consumer compliance risks throughout the institution. Material to be reviewed during completion of this section will include, at a minimum:

• The examiner-determined risk profile of the financial institution as it relates to monitoring
• Compliance-related policies and other written compliance procedures
• Documentation of the results of monitoring activities
• Formal and/or informal reports to management of the findings, corrective actions, and related follow-up from monitoring procedures
• Examiner notes from discussions with the compliance officer, manager, etc.

Conduct documentation review and have sufficient discussions with management to answer the following questions:

• What monitoring systems are in place for loan transactions? Deposit transactions? Investment and insurance sales activities?
• Is every transaction subject to monitoring? If not, what is the level of transactional review? Is the level of monitoring adequate?
• Does monitoring include a review of the performance by third party product or service providers?
• Are the appropriate personnel conducting the monitoring (i.e. someone with daily involvement in the monitored area and who has received adequate training)?
• How are errors that are identified during the monitoring process documented?
• How are the errors corrected?
• Is there appropriate follow-up when errors are identified (i.e. refresher training, disciplinary action)?

2. Determine whether the institution’s monitoring efforts encompass all applicable regulations.
3. Develop and document a preliminary assessment of the institution’s performance related to this area. Is the institution’s monitoring effort generally strong, adequate, or weak? On what is this assessment based?

Evaluating the Audit Function:

Material to be reviewed during completion of this section will include, at a minimum:

• The examiner-determined risk profile of the financial institution as it relates to the audit function
• Audit policy, external audit agreement, or other written audit guidelines
• Compliance-related internal and external audit reports, responses, and follow-up
• Internal and external audit workpapers
• Institution organizational chart
• Board minutes, Compliance Committee minutes, and other committee minutes, as applicable
• Examiner notes from discussions with audit staff, compliance officer, managers, etc.

Exception: Do not request fair lending self-testing reports (or results). If, however, a financial institution voluntarily provides documentation of its fair lending self-testing, review the findings as part of the fair lending examination.

NOTE: A financial institution’s audit or review of loan files, internal policies, and training material may indicate difference in the treatment of applicants that could constitute a violation of the fair lending laws.

1. Conduct documentation review and have sufficient discussions with management to answer the following questions:

• Are internal audits conducted? How often and by whom?
• If internal audits are conducted, is the auditor independent of the transaction being audited? If not, is this considered acceptable considering the institution’s resources and risk profile?
• Are external audits conducted? How often and by whom?
• Are internal/external audits comprehensive in scope? If audits are not comprehensive, do they cover all areas of significant risk? Do they include reviews at every branch location and of significant third party relationships?
• Are audit findings compiled in writing? Do they identify the nature and circumstances (i.e., cause, time period, etc.) of the identified exceptions? Do they provide management enough information to (1) determine cause and (2) formulate an appropriate corrective action?
• Are internal/external audits of sufficient quality?
• Are the audit findings communicated to the Board either directly or through the compliance committee?
• Have audit report findings been appropriately addressed by the Board and senior management in a timely manner and include corrective actions and follow-up efforts?
• Are written audit reports readily available for examiner review?

2. Develop and document a preliminary assessment of the institution’s performance related to this area. Is the audit function generally strong, adequate, or weak? On what is this assessment based?

Consumer Complaint Response

Examiners are to determine the responsiveness and effectiveness of the consumer complaint resolution process. Material to be reviewed during completion of this section will include, at a minimum:

• The examiner-determined risk profile of the financial institution as it relates to consumer complaints
• Consumer complaint policy or other written compliance procedures regarding complaints
• All files related to the receipt and resolution of compliance- related consumer complaints archived by the institution or the FDIC, including information from the FDIC’s automated complaint tracking system (EPIC)
• Board minutes, Compliance Committee minutes, and other committee minutes, as applicable
• Examiner notes from discussions with the compliance officer, managers, etc.

1. Conduct documentation review and have sufficient discussions with management to answer the following questions:

• Has the institution implemented policies and procedures to handle consumer complaints about the institution and, as applicable, third party providers?
• If policies and procedures are in place, do they comply with all regulatory requirements regarding complaints (maximum time limits for response, documentation requirements, etc.)?
• If the institution has received consumer complaints, have all complaints been resolved satisfactorily?
• Cross-referencing the complaints to all other areas of the CMS, does the type or quantity of complaints suggest any other areas in need of in-depth review?
• Does the institution review complaints to determine whether improvements or changes to products or operations should be made?

2. Develop and document a preliminary assessment of the institution’s performance related to this area. Are the institution’s consumer complaint response processes generally strong, adequate, or weak? On what is this assessment based?

Transaction Sampling and Testing

After analyzing the CMS elements in relationship to each of the institution’s inherent risks, the EIC will identify PSRs with residual risks and decide what transaction sampling and testing is necessary. The number of transactions and the particular regulatory requirements to be reviewed should be carefully tailored to weaknesses identified in the CMS as it relates to specific PSRs. For example, if there is a weakness in monitoring the calculation of Annual Percentage Rates in open-end credit transactions, then a sample of those calculations should be tested. It would not be necessary to test all Truth in Lending Act requirements.

The severity of CMS weakness and inherent risk will dictate the intensity of transaction testing; greater weakness and higher risk will generally lead to the review of more transactions. If the examiner finds a moderate degree of risk, then sufficient testing should be done to support a conclusion.

Depending on the importance of an element, the examiner may find it appropriate to conduct a limited review of a couple of transactions to support a favorable conclusion. In certain cases, however, management’s admission that a violation occurred is sufficient to warrant the citation without transaction testing. This also negates the need to list specific transactions in the ROE.

When transaction sampling and testing are conducted for PSRs exhibiting higher levels of residual risk, the examiner should tailor the actual sample and test to the identified weakness. If an inherent risk is sufficiently mitigated by the strength of the CMS, then minimal residual risk of consumer harm exists and transaction testing is not considered necessary.

Consultation Policy

Consultations and communication between field, regional, and Washington staff members help maintain the quality and consistency of consumer compliance, fair lending, and CRA examinations and supervision. Information communicated informally or through consultations alerts senior DCPofficials to significant, unusual or emerging supervisory issues, which ensures that these issues receive appropriate and timely consideration. Current information from examiners in the field also helps the FDIC and interagency groups develop more realistic policies and regulations.

Examination staff should consult with regional or field office management or staff if they find an unusual issue or problem. In turn, regional or field office management and staff are encouraged to consult with Washington subject matter experts, particularly with respect to findings, issues, or potential violations requiring guidance with respect to new regulations, or involving emerging/sensitive policy concerns.

Certain situations, because of their sensitivity or potential impact, mandate that the regional and/or Washington office(s) be consulted. Actions that require either approval or concurrence under delegated authority or DCP policy also require formal documentation.

If a consultation results in an outcome inconsistent with the examiner’s recommendation, then the examiner and the review examiner should ensure that the language of the ROE or CRA Performance Evaluation is consistent with the final outcome.

Communicating Findings

At the conclusion of an FDIC risk-focused, consumer compliance and Community Reinvestment Act (CRA) examination or review¹, compliance examination staff communicates supervisory findings to institutions describing the strengths and weaknesses of an institution’s compliance management system (CMS), assessing adherence to the consumer protection laws and regulations, and describing potential or actual consumer harm. Typically, such findings are conveyed during a meeting with the institution’s management and/or the Board of Directors/Trustees (Board) at the conclusion of a consumer compliance examination, and also in the Report of Examination (ROE).

Examiners communicate Matters Requiring Board Attention (MRBAs) when significant issues are identified requiring an institution’s Board and management to take prompt corrective action on behalf of the institution and elevated supervisory attention is necessary. Examiners also provide recommendations to management when issues are identified that have a lower risk of consumer harm and are correctable by management in the normal course of business. If institutions take recommended actions, their CMS generally improves, and subsequent supervisory attention may not be necessary.

Exit Meeting

An exit meeting is held with management at the conclusion of a consumer compliance and CRA examination or review. When practical, at least two FDIC representatives should be present at the exit meeting. Attendance by financial institution representatives other than management is at the discretion of management. These participants may include: consultants, agents, counsel, accountants, holding company officers, directors, and employees who work directly with consumer protection laws or CRA. The presence of the aforementioned representatives should only be during segments that pertain to their area of responsibility. Third party participants must be under contract with the bank, with appropriate confidentiality language, in order to attend the exit meeting.

During concurrent examinations with Risk Management Supervision (RMS), DCP’s Examiner-in-Charge (EIC) coordinates with RMS examiners to schedule the exit and Board meetings in an effort to ensure that all necessary attendees are present and that the bank’s and FDIC staff’s time is used efficiently. Reasonable requests from management, such as for separate meetings, are considered and accommodated, if practical.

Examination findings, including consumer compliance and CRA ratings, are not final until the appropriate reviews are conducted by review staff, and/or the Regional or Washington Offices, as applicable. Prior to the exit meeting, Regional Offices generally consult with examiners and approve enforcement action recommendations.

The exit meeting is used to:

• Summarize review or examination findings. All critical issues are discussed. If significant issues arise subsequently, they are discussed with management either in person, virtually, or by telephone. If management presents significant, new information at the exit meeting, additional review by the examiner may be required. In such instances, the examination process is left open for further review of applicable regulatory issues and the institution’s records. A second meeting with management may be necessary to discuss any additional matters.
• Discuss, when appropriate, positive findings to acknowledge the effectiveness of the institution’s consumer compliance or CRA efforts.
• Provide recommendations to address noted weaknesses or deficiencies.
• Recommend actions that would strengthen or enhance the financial institution’s CMS, as applicable.
• Obtain management’s response(s) and commitment(s) for corrective action for deficiencies identified in the CMS, including recommendations, and for cited violations and the resulting consumer harm.
• Advise management of recommended consumer compliance and CRA ratings, as well as any recommendations for formal or informal enforcement actions.

The agenda for the exit meeting lists the discussion items in the order of their significance in relation to the overall conclusions. The agenda also includes a tentative listing of Level 3 and Level 2 violations, and to the extent possible, draft copies of the pertinent violation sections of the ROE. At the exit meeting, examiners also provide management with a copy of the Level 1 violations, if applicable. A copy of the agenda is provided to management and included in the examination workpapers.

Board Meeting

The purpose of a meeting with the financial institution’s Board is to convey the pertinent findings of the examination directly to persons ultimately responsible for the operating policies and procedures of the institution. Board meetings are conducted after the exit meeting with management, and are planned for regularly scheduled Board meetings, whenever possible. When significant issues requiring consultation with the Regional Office are present, the FDIC’s Consultation Policy is followed prior to scheduling the Board meeting.

Board meetings must be attended by at least a quorum of Directors/Trustees. The EIC, Field Supervisor, Supervisory Examiner, and/or Review Examiner or senior member of the Regional Office staff attend, as deemed appropriate.

Board meetings may be appropriate in a variety of situations, but are required under one or more of the following circumstances:

• An informal or formal enforcement action is recommended
• The proposed consumer compliance rating is “3,” “4,” or “5”
• The proposed composite CRA rating, state rating, or multi-state rating is “Needs to Improve” or “Substantial Noncompliance”
• The institution’s management or Board requests such a meeting

A Board meeting is not required for:

• Visitations;
• Consumer Complaint Investigations; or
• Other Special Reviews.

Report of Examination

Introduction

The ROE is a consumer compliance examination’s principal document of record. It communicates the results of an examination to the Board and management of the financial institution. The ROE highlights the strengths and weaknesses of a financial institution’s CMS and cites violations (if any) in order of significance. The ROE may also include pages that inform the institution about MRBAs, compliance with enforcement actions, or other matters. The ROE offers recommendations for addressing deficiencies and improving future compliance management performance.² Compliance examiners develop the ROE’s content and its findings based on bank information reviewed during the supervisory process, FDIC examination policies and procedures, and examiner experience and professional judgment.

Format of the Report of Examination

The ROE is a standalone document that is organized as follows:

• Transmittal Letter
• Report Cover
• Examiner’s Comments and Conclusions
  • Consumer Compliance Examination Scope and Rating
  • Compliance Management System
    • Board and Management Oversight
    • Compliance Program
  • Optional headers to address significant findings (if applicable), such as Third Party Oversight, Fair Lending, etc.
  • Violations of Law and Consumer Harm
  • Community Reinvestment Act Scope and Rating (if applicable)
  • Enforcement Action(s) (if applicable, including proposed enforcement actions)
  • Matters Requiring Board Attention (if applicable)
  • Recommendation(s)
  • Meeting with Management
  • Meeting with Board of Directors (if applicable)
• Matters Requiring Board Attention (if applicable)
• Compliance with Enforcement Actions (if applicable)
• Level 3/High Severity Violations (if applicable)
• Level 2/Medium Severity Violations (if applicable)
• Other Matters (if applicable)
• Compliance - Supervisory Section (if applicable)

Transmittal Letter

A transmittal letter accompanies a ROE to a financial institution’s Board. The transmittal letter requires the institution, within a timeframe established by the applicable Regional Office, to send a letter or letters to the appropriate FDIC office notifying it, in sufficient detail, of the actual resolution of the MRBAs, recommendations, and Level 3 and Level 2 violations.

Appropriate staff at the Regional Office reviews an institution’s response and determines whether the response sufficiently addresses the issues. The Regional Office maintains a tracking system to ensure responses are received and corrective actions are completed in a timely manner. In cases where an enforcement action is pursued against an institution, examination staff will follow established monitoring procedures.

Content of the Report of Examination

The guiding principle for completing the ROE is that it contains all information that is necessary and useful for the institution’s Board and management to understand the scope and conclusions of the examination and any corrective actions that may be necessary to achieve compliance or address consumer harm. The ROE should aid the Board and management in developing an action plan to address any findings or supervisory concerns. Examiners exercise judgment and discretion when determining the amount of information and detail to include in the ROE. Factors examiners could consider when determining the amount of detail include significant CMS structure or management changes, significant changes in business strategy that impact the consumer harm risk profile, changes in ratings or adverse ratings, CMS weaknesses, violations resulting in significant consumer harm, civil money penalties, de novo or charter conversion status, complex or unusual programs or products, or management disagreement with ratings.³

Examiner’s Comments and Conclusions

Consumer Compliance Examination Scope and Rating 

This section of the ROE provides information regarding the date and scope of the compliance examination, including the fair lending review. Additionally, this section contains a table that discloses the consumer compliance ratings for the current and prior examination, as applicable. The table also includes the applicable rating definition for the current examination.

Compliance Management System 

This section of the ROE includes the EIC’s comments and conclusions regarding the overall quality of the institution’s CMS and the Board and management’s ability to effectively meet its compliance responsibilities. This section discusses the EIC’s comments and conclusions relative to each of the two elements of a CMS: Board and management oversight and the compliance program. Both positive and negative aspects of the institution’s management of its compliance responsibilities are discussed, while focusing on analysis rather than stating known facts about the bank’s CMS.

Fair lending matters are incorporated into the ROE. Fair lending findings are incorporated into the CMS section of the ROE, as appropriate. If warranted, a separate fair lending section may be included in the ROE, with reference to the appropriate CMS section.

Violations of Law and Consumer Harm 

This section of the ROE summarizes the relationship between violations identified and the deficiencies in the CMS. This section also summarizes the consumer harm that resulted from such deficiencies. Generally, examiners consider the collective significance and frequency of all infractions and any mitigating factors.

Violations are categorized as Level 3/High Severity, Level 2/Medium Severity, and Level 1/Low Severity. Only violations at Levels 3 and 2 that are of high or medium severity are discussed in this section of the ROE. Level 1 violations will not be mentioned in the examiner’s comments and conclusions pages of the ROE.

If applicable, this section will include information about restitution of any type and briefly state the total amount of restitution when reliable estimates have been determined, or estimates based upon the examiner’s calculations, including the assumptions on which the estimates are based. Finally, a reference to the violation page(s) is included.

Community Reinvestment Act Scope and Rating 

If a concurrent CRA evaluation was conducted, this section provides information regarding the scope of the CRA evaluation and any notable weaknesses identified. This section also includes a table with the current and previous CRA ratings, the definition of the current CRA rating, and the current and previous CRA rating components for Intermediate Small Bank and Large Bank evaluations, if applicable. Finally, a reference to the CRA Performance Evaluation is included.

Matters Requiring Board Attention 

This section addresses matters requiring board attention, as applicable, and includes a reference to the separate MRBA page.

Recommendation(s) 

This section summarizes all examiner recommendations that were not fully addressed during the examination, as applicable, including violation-, CRA-, and fair lending-related recommendations. If no recommendations were provided or all recommendations were fully addressed during the examination, this section will note that, as applicable.

Enforcement Action(s) 

This section includes a brief comment summarizing any proposed enforcement action(s) and/or the institution’s actions with regard to any outstanding enforcement action(s). For outstanding enforcement action(s), the adequacy of the steps taken by the institution to comply with each provision will be discussed on separate “Compliance with Enforcement Actions” pages.

When an EIC recommends an informal or formal enforcement action against an institution, the provisions of the proposed enforcement action as well as the reasons for the recommendation should be discussed with the Board and management and documented in the Meeting with Management and Meeting with the Board of Directors sections of the Examiner’s Comments and Conclusions pages in the ROE.

Meeting with Management 

This section of the ROE describes the exit meeting with management.

Meeting with Board of Directors 

This section of the ROE describes the meeting with the Board members.

Matters Requiring Board Attention

The MRBA page is only included in the ROE for items that are significant and require prompt corrective action and elevated supervisory attention. MRBAs are intended to clearly convey to an institution’s Board and management issues of the highest degree of supervisory concern. MRBAs could include violations of consumer protection laws; CMS weaknesses that, if left unaddressed, could adversely affect the institution; activities that resulted in consumer harm; or emerging issues that impact the institution and require proactive attention to mitigate risks.

If a matter that requires the Board and management’s attention is included as a provision in a proposed enforcement action, it should not be duplicated on the MRBA page.

Compliance with Enforcement Actions 

The Compliance with Enforcement Actions page is only included when applicable and discusses how management has addressed weaknesses identified in the action. The guidance in this section applies to both formal and informal actions. The page will start with a brief overview of the facts leading to the issuance of an action.

Each provision should be followed with the examiner’s assessment of the adequacy of the steps taken by the institution to comply with the provision. For example, an assessment of a new policy might say “The updated Compliance Policy is comprehensive and tailored to the bank’s product offerings.” Examiners should not use conclusory statements of opinion such as “The institution is in compliance/noncompliance with this provision.” Comments should indicate whether any time limits set forth in actions have been met.

At the first examination/visitation after the issuance of a formal or informal action, the provisions of the action will generally appear verbatim on this page. At subsequent examinations/visitations, the examiner need only address provisions of an ongoing nature and those that remain outstanding. In all cases, a summary of the institution’s actions with regard to the enforcement action will be included on the examiner’s comments and conclusions page along with the examiner’s recommendation to terminate, continue, or change the enforcement action.

Violations

The violations page(s), when applicable, serve as the institution’s official record of violations identified during an examination.

Level 3 and Level 2 violations are described in the ROE and are listed in order of severity with management’s response to each violation. Level 1 violations are recorded as a list on the Level 1 Violations page. The Level 1 Violations page is left with management at the conclusion of the exit meeting but is not included in the ROE or mentioned in the examiner’s comments and conclusions pages of the ROE.

Descriptions of the Level 3 and Level 2 violations in the violations pages readily call attention to the general nature and magnitude of these matters. Examiner’s recommendations to address the violations along with management’s responses will be included on the violations pages. Where no violation was found for a particular level of violation, the associated violations page is omitted.

The FDIC relies on examiner professional judgment in categorizing the level of violations. Examiners make reasonable efforts to appropriately categorize violations; however, the key purpose of the categorization system is to communicate to institutions the FDIC’s level of concern regarding each of the violations cited, and for institutions to appropriately prioritize efforts to correct violations cited.

Violations that have been self-identified by a bank and fully corrected before the start of the examination (including remedial action, if appropriate) generally are not cited on the violations pages or recorded in FOCUS.⁴ Examiners confirm that the bank identified the root cause of the violation and that the corrective action gives reasonable assurance that the violation will not recur.

Note: The self-identification of violations is the result of a proactive approach to identify weaknesses in an effort to facilitate the early detection of regulatory violations and limit the scope of consumer harm. Self-identification reflects a robust and effective CMS that includes adequate monitoring and/or audit functions and effective responses to consumer complaints. Examiners consider self-identification of violations, along with prompt and full corrective action, including remediation of consumer harm, as applicable, as a strength of the bank’s CMS when its corrective action is the result of proactive measures resulting from the bank's CMS functions. Examiners do not consider violations identified by way of supervisory activities between examination cycles (e.g. visitations or other regulator-initiated engagement), litigation, investigations by other agencies, or other means outside of the bank's CMS functions, as self-identified or a strength of the CMS, although promptly addressing issues identified through these channels will be considered positively.

Level 3/High Severity Violations 

Violations of the highest concern that have resulted in significant harm to consumers or members of a community are classified as Level 3/High Severity. These violations typically result in a request or a requirement that the institution provide restitution in excess of $10,000 (in aggregate), or include, for example, pattern or practice violations of anti-discrimination provisions, including redlining or widespread discouragement.

Level 2/Medium Severity Violations 

Violations of moderate concern reflecting systemic, recurring, or repetitive errors that represent a failure of the bank to meet a key purpose of an underlying regulation or statute are classified as Level 2/Medium Severity. These violations may have had a small, but negative impact on consumers or have the potential to have a negative impact if uncorrected. Level 2 violations may also include those resulting in potential restitution in an amount below the Level 3 threshold.

Level 1/Low Severity Violations 

Violations of the lowest concern that are isolated or sporadic, or systemic violations that are unlikely to affect consumers or the underlying purposes of an applicable regulation or statute are classified as Level 1/Low Severity. These violations are typically due to individual instances of failure to follow established procedures or minor errors in the implementation of reasonable procedures to comply with the obligations of a regulation or statute.

Other Matters 

The Other Matters page, if used, discusses matters that arise during an examination that may not rise to the level of a violation of law or regulation regarding which the FDIC has examination authority. Other matters may include apparent violations that are referred to another agency, or details to support a potential risk that is included on the examiner’s comments and conclusions pages.

Compliance - Supervisory Section 

The purpose of the Supervisory Section is to provide the FDIC Regional Office, Washington Office, and other banking regulators with confidential or controversial information. It also provides information to succeeding examiners on supervisory and examination activities relating to the institution. The Supervisory Section is not included in the ROE transmitted to the institution. Examples of information important to report on this page include:

• Planned changes in key management positions or compliance personnel that are not widely known in the institution
• Pending litigation on a consumer protection matter that is not widely known in the institution
• Tentative plans or strategies that are not widely known in the institution that may affect the frequency or scope of future compliance examinations
• An explanation as to why civil money penalties are not imposed for Flood Insurance violations involving pattern or practice violations
• Bank’s compliance with the Interstate Banking and Branching Efficiency Act of 1994

This page is omitted when there are no issues to discuss, or all information is accessible in FOCUS, or the examination workpapers.

Review of the Report of Examination

The EIC or Review Examiner, as directed by regional policy, completes and uploads the following documents into FOCUS for review:

• Transmittal Letter
• Report Cover
• Examiner’s Comments and Conclusions
• CRA Performance Evaluation (if applicable)
• Matters Requiring Board Attention (if applicable)
• Compliance with Enforcement Actions (if applicable)
• Level 3/High Severity Violations (if applicable)
• Level 2/Medium Severity Violations (if applicable)
• Level 1/Low Severity Violations (if applicable)
• Other Matters (if applicable)
• Compliance - Supervisory Section (if applicable)
• Final examination scoping documents for compliance and fair lending.

The EIC ensures that all FOCUS submission requirements are met, which includes completing all applicable screens and recording the appropriate violation code for all levels of violations cited during the examination or visitation.

During the review process, Review Examiners identify any gaps, inconsistencies, or unsupported or unexplained conclusions contained in the ROE or any other document informing the institution of an FDIC material supervisory determination. The assigned Review Examiner and the EIC shall fully support the facts identified with supporting information before the ROE or document is submitted to the institution.

Generally, examiners conduct Board meetings before forwarding the ROE to FDIC’s Regional or Washington Office for review. However, in special circumstances, examiners may conduct the meeting after forwarding the report for review. If this occurs, the EIC will prepare a memorandum to the Regional Office summarizing the pertinent issues from the Board’s discussion for inclusion in the ROE.

The FDIC communicates with the financial institution if, during the review process, the examiner’s recommended rating is downgraded or the examiner’s conclusions are changed in a way that adversely affects the financial institution.

After the ROE is signed, it is delivered to the Board of the financial institution.

Introduction

Examination documentation should demonstrate a clear trail of decisions and supporting logic within a given area. Documentation should provide a written record of the examiner’s decisions and analysis and provide support for assertions of fact or opinion in the Consumer Compliance Report of Examination (ROE). A well-constructed examination documentation file will provide sufficient data to reconstruct the examiner’s decision process for each step of the examination. This includes support for the examiner’s decision to include or exclude a regulation or area of review from the scope of the examination, as well as providing documentation of significant findings, including Level 3 and Level 2 violations.

It is vitally important that appropriate, relevant workpapers are maintained within the applicable storage medium to support:

• Review of the ROE;
• Expanded explanations of Level 3 and Level 2 violations in the event of subsequent enforcement action or appeals of supervisory determinations;
• Development of a supervisory plan;
• A current risk profile; and
• Developing the scope of future examinations and limiting future information and document requests of the institution.

Documenting Findings

1. The Assessment of Risk of Consumer Harm (ARCH) is used to identify and documents inherent risk. Some areas of risk will be eliminated from further review during pre-examination planning based on their low level of inherent and/or residual risk. Section 3 of the ARCH should explain why areas are eliminated from review. Comments should be concise but specific enough to indicate why consumer harm risk is low and how CMS factors mitigate the inherent risk.

2. The ARCH also is also used to identify and documents the areas with moderate or high level of potential consumer harm risk that are not mitigated by the strength of the CMS. Section 3 of the ARCH also establishes specific products, services, or regulations (PSRs) for review or transaction testing. As discussed in this manual, PSRs are based on residual consumer harm risk and only PSRs exhibiting such residual risk are included in the examination scope.

   There may be certain situations in which transaction testing or other review procedures will be necessary but is not predicated upon residual consumer harm risk. Training and development needs are one example. These types of reviews should be addressed in Section 4 of the ARCH but in the Other Areas for Review section rather than as a PSR.

3. An Examiner Summary workpaper should be prepared for each area selected for transaction testing or other review procedures. The Examiner Summary should support examination findings, conclusions, and supervisory recommendations and discuss applicable strengths and weaknesses relevant to inherent risk and how effectively the bank is identifying, addressing, and preventing consumer harm. The Examiner Summary, in conjunction with the ARCH and the ROE, will allow subsequent readers to clearly identify the scope of work performed and the basis for the examiner’s conclusion.

   Include:

   • A statement indicating the scope of the review and describing the examination procedures used. Copies of the procedures, marked to indicate the portions used, may be substituted for the description.
   • Examiner Summaries should include (1) significant findings and their impact on the CMS rating and (2) any deficiencies or violations noted during the examination that are not contained in the ROE.
   • Generally, the examiner should maintain all discussion notes and all copies of bank documentation obtained during the examination. Exceptions can be made for irrelevant material or bulky items that have limited audit trail value. A copy of any document which is being directly criticized, or which supports a criticism made during the examination, must be maintained in the workpapers.

Again, Examiner Summaries are only necessary for areas selected for transaction testing or other review procedures.

4. When a violation of a specific regulation has been identified, then:
   • Ensure the appropriate workpapers are fully completed and that supporting documentation is attached. The use of standardized workpapers is required. The examiner is required to download the most current version of the standardized workpaper prior to the start of the current examination. The workpaper and documentation should be sufficient to enable an examiner having no previous connection with the examination to ascertain the evidence supporting the significant conclusions, judgments, cited violations, and compliance with any outstanding enforcement action.
   • Assign a violation code to each violation identified during the examination. All violation codes, regardless of whether or not they were detailed in the ROE, should be uploaded through theFramework for the Oversight of Compliance and CRA Activities User Suite (FOCUS) at the completion of the examination.
5. Ensure the workpapers include clear and legible notes from discussions with management. All responses to examiner questions should be readily attributable to specific members of management. Specific comments made by management that are relevant to a significant finding should be marked or highlighted accordingly.

6. Attach to the relevant workpapers the documents supporting each finding noted in the ROE.

   For example:

   • A copy of the relevant portion of the bank’s compliance policy which stipulates procedures that are in contradiction to the procedures actually performed.
   • Copies of notes and related disclosure statements for violations of Regulation Z, Truth in Lending.
   • Copies of adverse action notifications for violations of Fair Credit Reporting Act and/or Regulation B, Equal Credit Opportunity.

   • Copies of completed hold notices where the financial institution failed to make $200 available at the start of the next business day in violation of Regulation CC, Expedited Funds Availability.

     NOTE: For any violations cited as systemic or a pattern or practice, the examiner need only attach enough copied documents to support this conclusion. Additionally, any violations cited in the ROE that contain examples of specific transactions should have corresponding evidence in the examination file. Furthermore, any violation that results in the imposition of a civil money penalty should be supported with all applicable documentation. 

Filing Workpapers

The EIC is responsible for ensuring that all appropriate documents are uploaded according to national standardized workpapers filing schema for the areas reviewed during the examination and ensuring the documents are complete and legible. The EIC can assign this responsibility to team members, as appropriate (e.g., the examiner reviewing an area could be assigned responsibility to upload the appropriate documents in that specific review).

The EIC (or designee) should:

• Review workpapers to ensure that they are accurate, legible, and complete.
• Determine that appropriate bank documentation, where applicable, has been attached and retained in the workpapers.
• Confirm that mandatory workpapers are appropriately organized and uploaded to electronic storage.
• Close the examination in the electronic storage database after the EIC has been informed that the RE review process is complete.

General Procedures

1. The EIC, or designee, should upload workpapers into the electronic storage database:
   1. Check to make sure that you are not overwriting a more current version of the document;
   2. Do a quality control check to ensure that the documents are legible and that all pages have been included (front and back).
2. Workpapers are generally not changed after the conclusion of an examination. However, if revising a workpaper in any manner after the completion of an examination is necessary, such revisions should be clearly documented on the workpaper.
3. Some checklists in this manual have been incorporated into the national standardized workpapers and are required to be completed in conjunction with the review of an area. In situations where the national standardized workpapers have not incorporated the checklists within the manual, or if a checklist is obtained elsewhere, the completion of these checklists is optional. The examiner has the option of completing relevant portions of the checklists or using them merely as a guide. If used, they should be maintained in the workpapers, as they help document the procedures performed during the examination.
4. Documents added into the electronic storage database are only those not required to be uploaded to FOCUS.

Retention

Retain workpapers for a period of at least two years or until the next examination, whichever is later. Retain workpapers for longer periods in the following instances, until corrective action or other resolution is complete:

• Truth in Lending violations requiring reimbursement;
• Fair lending violations resulting in referrals to the Department of Justice or Department of Housing and Urban Development;
• Any type of enforcement action that has been placed on or remains outstanding against the financial institution;
• A criminal referral has been made regarding the institution or any of its directors, trustees, management, or employees; and
• Other reasons, at the discretion of the Regional Director or Field Supervisor, for which the retention of documents and workpapers is required.

Consult the FDIC Records Schedule directives for further information.

FOCUS

FOCUS is the system of record for the compliance and CRA examination program and is extensively used by compliance field supervisors, examiners, review examiners, and Washington Office staff. FOCUS is used to support reporting requirements, provides substantial task support for staff, and is a management support and decision tool. Among other functions, FOCUS:

• Generates examination schedules that are used to support workload projections by incorporating quarter planning and benchmark hours;
• Provides information to facilitate the pre-exam process;
• Captures examination summary information;
• Attaches examination documents for divisional sharing and historical reference;
• Tracks information through the consultation process; and
• Facilitates the reporting of examination data for legislatively mandated reporting.

Information in FOCUS should be complete, accurate, and timely.

• Examiners and reviewers should ensure that the most current versions of documents are attached and labeled correctly. For example, and when applicable:
  • Transmittal Letter;
  • Cover Page;
  • Examiner’s Comments and Conclusions;
  • CRA Performance Evaluation;
  • Supervisory Comments;
  • Level 1, Level 2, and Level 3 Violations Pages;
  • Final examination scoping documents for compliance and fair lending (i.e., ARCH and FLSC).
• Examiners and reviewers should ensure that all required information fields are completed at the conclusion of the examination;
• Supervisors should plan examinations and visitations in advance and indicate the quarter for which the activity is planned; and
• EIC, or designees, should update required dates, such as the Examination Date, as soon as possible.

Investigations

Consumer Complaints

Consumer complaint investigations are generally handled by Consumer Response Unit staff. Examiners will be requested to assist if deemed necessary.  As with all sensitive matters, close cooperation between staff in the field office, region, and Washington is essential to a prompt and appropriate resolution of a complaint.

Enforcement Actions

To obtain information or evidence necessary to support an enforcement action, a formal investigation may be conducted pursuant to Section 10(c) of the FDI Act.  Through such an investigation, administrative subpoenas may be issued for information or testimony.  Orders of Investigation must be developed in cooperation with the Legal Division, which shares delegated authority for this process.

Visitations

Introduction

Visitations are usually targeted events aimed at specific operational or regulatory areas, but can also focus on compliance management systems that require more than the normal level of supervisory attention.  Visitations are conducted by the FDIC to review the compliance posture of an institution that is newly chartered, involved in a recent or proposed merger, or recently converted to state nonmember status; to review an institution’s progress on corrective actions since its last examination; to ascertain an institution’s compliance with an enforcement action; and to investigate problems brought to the FDIC’s attention.

Conducting a Visitation

Visitations can be scheduled at any time at the discretion of Regional Office management.

Visitations may be expanded to a regular consumer compliance/CRA examination with the Examiner-in-Charge’s recommendation and Regional Office management’s concurrence.  This recommendation should be considered in situations where:

• Significant deficiencies are noted in a financial institution’s compliance management system or CRA policies or procedures;
• Significant noncompliance is noted particularly regarding previously criticized areas; or
• Significant noncompliance with an informal or formal enforcement action is noted.

Regional Office management may change an institution’s compliance rating if interim events, visitations, investigations, or similar situations result in finding that the assigned rating is no longer suitable and that a different level of supervisory concern is warranted.  Ratings may be moved up or down.  Decisions to change a rating must be based on a review that considers whether the institution’s compliance with consumer protection and civil rights statutes and regulations display weaknesses requiring special supervisory attention and which are cause for more than a normal degree of supervisory concern.  Any change must be carefully documented, and the bank should be notified of the change and the basis for it.

General Visitation Procedures

1. Perform appropriate review and analysis procedures prior to the commencement of the visitation.  Review should include documents in electronic storage facilities that have been received from the bank since the previous examination activity, such as progress reports.  Tailor the visitation to address the compliance deficiencies or concerns identified, or the matters under review.  An Assessment of Risk and Consumer Harm (ARCH) is not required.
2. Notify the institution of the date of the visitation.
3. Conduct the visitation.  An initial meeting with management should define the scope of the visitation.
4. If applicable, prepare a list of violations.  Examiners will use the violations pages from the Report of Examination and include these pages with the Report of Visitation submitted to the Regional Office.
5. Consult as appropriate or required.
6. Conduct a closing meeting with management and, if the situation warrants, a meeting with the Board.  Leave a copy of the violations list with management.

Preparing the Report of Visitation

1. Prepare Report of Visitation (Compliance) using the Report of Visitation Cover and Report of Visitation template.  Additional pages may include, as applicable:

• Matters Requiring Board Attention
• Compliance with Enforcement Actions
  • The financial institution must receive, either in the Report of Visitation, Report of Examination, or both, a discussion of compliance with the provisions of an outstanding enforcement action.
• Level 3/High Severity Violations
• Level 2/Medium Severity Violations
• Level 1/Low Severity Violations
  • The Level 1 Violations page is left with management at the conclusion of the exit meeting but is not included or discussed in the Report of Visitation.
• Other Matters
• Compliance - Supervisory Section
  • Include recommendation to the Regional Office on whether to remove or retain reporting requirements contained within outstanding formal or informal enforcement actions (if not included on the report).

2. Forward the Report of Visitation to the review staff designated by Regional Office management.
3. Update all appropriate FOCUS data fields and ensure that all FOCUS submission requirements are met.
4. Regional review staff will review the Report of Visitation.  At the discretion of the Regional Office management, visitation findings will be forwarded to the financial institution by either of the following:

• Transmittal letter only; or
• Transmittal letter and Report of Visitation.

Documenting Visitation Findings

Standardized workpapers must be completed for applicable areas reviewed during each visitation.

Introduction

The FDIC may initiate informal or formal action when an insured depository institution is found to be in an unsatisfactory condition.  Informal actions represent the final supervisory step before formal enforcement proceedings are initiated.  The FDIC has broad enforcement powers under the Federal Deposit Insurance (FDI) Act to issue formal enforcement actions.

This section provides a brief summary of the types of informal and formal actions that the FDIC has the authority to issue.  When considering an enforcement action, the consultation policy should be followed.

Types of Enforcement Actions

Informal actions are voluntary commitments made by the Board of Directors/trustees of a financial institution. They are designed to correct identified deficiencies and ensure compliance with federal and state banking laws and regulations.  Informal actions are neither publicly disclosed nor legally enforceable.

The most common informal enforcement actions used by the FDIC are the following:

• Board Resolution: Informal commitments developed and adopted by a financial institution’s Board of Directors/trustees, often at the request of an FDIC Regional Director, directing the institution’s personnel to take corrective action regarding specific noted deficiencies. The FDIC is not a party to the resolution, but approves and accepts the resolution as a means to initiate corrective action.
• Memorandum of Understanding: Informal agreement between an institution and the FDIC that is drafted by the Regional Office staff to address and correct identified weaknesses in an institution’s compliance or CRA posture.  A Memorandum of Understanding is generally used in place of a Board Resolution when the FDIC has reason to believe that a Board Resolution would not adequately address the deficiencies noted during the examination.

Formal enforcement actions are those taken pursuant to the powers granted to the FDIC’s Board of Directors under Section 8 of the FDI Act.  Each situation and circumstance determines the most appropriate action(s) to be taken. It is of note that formal enforcement actions are publicly available records.

Formal actions used in connection with compliance matters may include the following:

• Termination of Insurance: Section 8(a).
• Cease-and-Desist Order: Section 8(b): Issued to halt violations of laws or regulations as well as to require affirmative action to correct any condition resulting from such violations.  By ordering an institution or an institution affiliated party (IAP), including an individual officer or director of an institution, to cease and desist from practices and/or take affirmative actions, the FDIC may prevent the problems facing the institution from reaching such serious proportions as to require more severe enforcement actions.  If an institution voluntarily agrees to the entry of a Cease -and- Desist Order, it is entitled a “Consent Order.”
• Order for Restitution: Section 8(b)(6): Issued to require an institution or IAP to disgorge any unjust enrichment to consumers and/or take other affirmative action to redress consumer harm.
• Temporary Cease-and-Desist Order: Section 8(c): Issued in the most severe situations to halt particularly egregious practices pending a formal hearing on permanent Cease-and-Desist Orders issued pursuant to Section 8(b).
• Removal and Prohibition Order: Section 8(e)(1): The FDIC has the authority to order the removal of an IAP, i.e., director, officer, employee, controlling stockholder other than a bank holding company, or agent for an insured depository institution.  The prohibition may be for specific activities or may be industry-wide.
• Temporary Suspension Order: Section 8(e)(3): The FDIC may order the temporary suspension of an IAP pending a hearing on an Order of Removal if the individual’s continued participation poses an immediate threat to the institution or to the interests of the institution’s depositors.
• Suspension Order: Section 8(g): Issued to IAPs who are charged with felonies involving dishonesty or a breach of trust pending the disposition of the criminal charges.
• Civil Money Penalties: Section 8(i)(2):  CMPs are assessed to sanction an institution, IAP, or an individual for a violation, breach of a fiduciary duty, and/or practice.  They are also assessed to deter future occurrences. In the case of a CMP assessed to an institution or IAP, twelve factors that measure the breadth and severity of the problem are considered, including consumer harm, cooperation, and supervisory history.  Additionally, the asset size of the institution is taken into account.  In the case of a CMP assessed to an individual, a similar analysis is performed.  The FDIC utilizes separate matrices for institutions and individuals.  In both cases, the CMP matrices are guidance intended to promote consistency in the assessment of CMPs.  The matrices aid the examiner in determining the appropriateness and/or level of CMPs. Each CMP matrix is included at the end of this section.

Annual publication of adjustments to civil money penalties will occur by January 15 of each calendar year.  The FDIC will publish notice in the Federal Register of the maximum penalties that may be assessed after January 15 of that year.  When recommending or assessing a CMP, the CMP amount recommended or assessed will reflect the most recent inflation-adjusted CMP amounts.

References

Federal Deposit Insurance Act, Section 8

12 CFR §308 (Rules of Procedure; multiple subparts)

Interagency Policy Regarding the Assessment of Civil Money Penalties by the Federal Financial Institutions Regulatory Agencies

Interagency Notification and Coordination of Enforcement Actions by the Federal Banking Regulatory Agencies

Joint statement of Policy: Administrative Enforcement of the Truth in Lending Act – Restitution

MATRIX for CMPs AGAINST INSTITUTIONS

Matrix for CMPs Against Institutions (continued)

NOTE:  The Matrix for CMPs Against Institutions is offered only as guidance; it should not be a substitute for experience and sound supervisory judgment. The matrix in no way limits the discretion of the FDIC to factor in the precise facts and circumstances of each case, or other factors as justice requires, into the CMP determination.  Also, to determine a CMP against an individual, refer to the Instructions and Matrix for Civil Money Penalties Against Individuals.  The CMP amount may not exceed the statutory maximum set forth in section 8(i)(2) of the FDI Act, as adjusted by 12 C.F.R. § 308.132.

Matrix for CMPs Against Individuals

Matrix for CMPs Against Individuals (continued)

Examination Objectives

1. Determine during PEP whether the prior Report of Examination included a request for restitution pursuant to Section 108(e) of the Truth in Lending Act.
2. Become familiar with the nature of the violations and the extent of the file search necessary to identify affected loans.
3. Review the correspondence file to determine if the financial institution has reported completion of the restitutions or if there are any unresolved issues pending, such as a formal request for relief from restitution.
4. Perform the following examination procedures during PEP in those instances where the number of loans subject to restitution is relatively small and requesting the institution to provide relevant documentation would not be burdensome.

    The objectives are to:

• Determine that a complete file search was conducted.
• Verify that restitution calculations and worksheets from the financial institution are accurate and conform with violations cited.
• Verify that restitutions were made to all entitled customers and dispersed correctly.

Verification Procedures

The following procedures are to be used when reviewing an institution’s compliance with restitution requested as a result of Truth in Lending (TIL) / Regulation Z violations subject to restitution cited at the previous compliance examination.

1. Identify the person(s) responsible for making the calculations and providing restitution.
2. Discuss the method used to determine which loans were subject to restitution.
3. Determine that an appropriate file search and any subsequent restitutions were completed in accordance with direction received from the FDIC through the prior Compliance Report of Examination and transmittal letter sent to the financial institution.
4. Consider the following items when determining the scope of the review:
   • Number of affected loans identified;
   • Effectiveness of overall compliance program;
   • Management’s willingness to correct prior violations;
   • Nature of violations; and
   • Time constraints.
5. Review restitution documentation for accuracy.
6. Review restitution documentation for the following items:
   • Restitution calculations;
   • Canceled restitution checks (When reviewing canceled checks be sure to look at the endorsement(s) on the back of the checks to ensure the checks have been endorsed by the appropriate individual(s)); and
   • Verify, through a sample of checks, the validity of the endorsement signature.
7. Compare the list of restitution exceptions, maintained in the prior Compliance Examination workpapers, with the file search and actual restitutions made by the financial institution.
8. If either the file search or restitutions were not handled correctly, immediately inform the Field Supervisor and the Regional Office.
9. The examiner must complete appropriate workpapers, in accordance with instructions, and attach them to the appropriate documentation of the financial institution’s restitution calculations.

References

Joint Statement of Policy: Administrative Enforcement of the Truth in Lending Act—Restitution

FIL 19-97: Requests for Relief from Reimbursement under the Truth in Lending Act 

FIL 20-98: Reimbursable Violations of the Truth in Lending Act 

Attachment to FIL 20-98: Interagency Questions and Answers Regarding Corrective Action Time Periods under the Truth in Lending Act Policy Guide

Introduction

Section 309(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (Public Law 103-325, 108 Stat.2160) (Riegle Act) required the Federal Deposit Insurance Corporation (FDIC) to establish an independent intra-agency appellate process to review material supervisory determinations made at insured depository institutions that it supervises.  The Guidelines for Appeals of Material Supervisory Determinations (“guidelines”) describe the types of determinations that are eligible for review and the process by which appeals will be considered and decided.  The procedures set forth in these guidelines establish an appeals process for the review of material supervisory determinations by the Supervision Appeals Review Committee (“SARC”).

The following individuals comprise the three (3) voting members of the SARC: (1) One inside FDIC Board member, either the Chairperson, the Vice Chairperson, or the FDIC Director (Appointive), as designated by the FDIC Chairperson (this person would serve as the Chairperson of the SARC); and (2) one deputy or special assistant to each of the inside FDIC Board members who are not designated as the SARC Chairperson.  The General Counsel is a non-voting member of the SARC.  The FDIC Chairperson may designate alternate member(s) to the SARC if there are vacancies so long as the alternate member was not involved in making or affirming the material supervisory determination under review.  A member of the SARC may designate and authorize the most senior member of his or her staff within the substantive area of responsibility related to cases before the SARC to act on his or her behalf.

Institutions Eligible To Appeal

The guidelines apply to the insured depository institutions that the FDIC supervises (i.e., insured State nonmember banks, insured branches of foreign banks, and state savings associations) and to other insured depository institutions with respect to which the FDIC makes material supervisory determinations.

Determinations Subject To Appeal

An institution may appeal any material supervisory determination pursuant to the procedures set forth in these guidelines.  Material supervisory determinations include:

1. CAMELS ratings under the Uniform Financial Institutions Rating System;
2. IT ratings under the Uniform Interagency Rating System for Data Processing Operations;
3. Trust ratings under the Uniform Interagency Trust Rating System;
4. CRA ratings under the Revised Uniform Interagency Community Reinvestment Act Assessment Rating System;
5. Consumer compliance ratings under the Uniform Interagency Consumer Compliance Rating System;
6. Registered transfer agent examination ratings;
7. Government securities dealer examination ratings;
8. Municipal securities dealer examination ratings;
9. Determinations relating to the adequacy of loan loss reserve provisions;
10. Classifications of loans and other assets in dispute the amount of which, individually or in the aggregate, exceed 10 percent of an institution’s total capital;
11. Determinations relating to violations of a statute or regulation that may affect the capital, earnings, or operating flexibility of an institution, or otherwise affect the nature and level of supervisory oversight accorded an institution;
12. Truth in Lending (Regulation Z) restitution;
13. Filings made pursuant to 12 CFR 303.11(f), for which a Request for Reconsideration has been granted, other than denials of a change in bank control, change in senior executive officer or board of directors, or denial of an application pursuant to section 19 of the Federal Deposit Insurance Act (“FDI Act”), 12 U.S.C. §1829 (which are contained in 12 CFR §308, subparts D, L, and M, respectively), if the filing was originally denied by the DCP Director, Deputy Director or Associate Director; and
14. Decisions to initiate informal enforcement actions (such as memoranda of understanding):
15. Determinations regarding the institution’s level of compliance with formal enforcement action; however, if the FDIC determines that the lack of compliance with an existing formal enforcement action requires additional enforcement action, the proposed new enforcement action is not appealable;
16. Matters requiring board attention; and
17. Any other supervisory determination (unless otherwise not eligible for appeal) that may affect the capital, earnings, operating flexibility, or capital category for prompt corrective action purposes of an institution, or otherwise affect the nature and level of supervisory oversight accorded an institution.

Material supervisory determinations do not include:

1. Decisions to appoint a conservator or receiver for an insured depository institution;
2. Decisions to take prompt corrective action pursuant to section 38 of the FDI Act, 12 U.S.C.§1831o;
3. Determinations for which other appeals procedures exist (such as determinations of deposit insurance assessment risk classifications and payment calculations); and
4. Formal enforcement-related actions and decisions, including determinations and the underlying facts and circumstances that form the basis of a recommended or pending formal enforcement action.

A formal enforcement-related action or decision commences, and becomes unappealable, when the FDIC initiates a formal investigation under 12 U.S.C. §1820(c) or provides written notice to the institution of a recommended or proposed formal enforcement action under applicable statutes or published enforcement-related policies of the FDIC, including written notice of a referral to the Attorney General pursuant to the Equal Credit Opportunity Act (“ECOA”) or a notice to the Secretary of Housing and Urban Development (“HUD”) for violations of the ECOA or the Fair Housing Act (“FHA”).  For the purposes of these Guidelines, remarks in a Report of Examination do not constitute written notice of a recommended or proposed enforcement action.  A formal enforcement-related action or decision does not affect the appeal of any material supervisory determination that is pending under these Guidelines.

Additional SARC Rights

1. In the case of any written notice from the FDIC to the institution of a recommended or proposed formal enforcement action, including a draft consent order, is not pursued within 120 days of the written notice, SARC appeal rights will be made available pursuant to these guidelines.  The FDIC may extend this 120-day period, with the approval of the SARC Chairperson, if the FDIC notifies the institution that the relevant Division Director is seeking formal authority to take an enforcement action.
2. In the case of a referral to the Attorney General for violations of the ECOA, if the Attorney General returns the matter to the FDIC and the FDIC does not initiate an enforcement action within 120 days of the date the referral is returned, SARC appeal rights will be made available pursuant to these guidelines.
3. In the case of providing the notice to HUD for violations of the ECOA or the FHA, if the FDIC does not initiate an enforcement action within 120 days of the date the notice is provided, SARC appeal rights will be made available under these guidelines.
4. Written notification of SARC rights will be provided to the institution within 10 days of a determination that such rights have been made available.
5. The FDIC and an institution may mutually agree to extend the timeframes in paragraphs (a), (b), and (c) if the parties deem it appropriate in order to reach a mutually agreeable solution.

Good Faith Resolution

An institution should make a good faith effort to resolve any dispute concerning a material supervisory determination with the on-site examiner and/or the appropriate Regional Office.  The on-site examiner and the Regional Office will promptly respond to any concerns raised by an institution regarding a material supervisory determination.  Informal resolution of disputes with the on-site examiner and/or the appropriate Regional Office is encouraged, but seeking such a resolution is not a condition to filing a request for review with the Division of Depositor and Consumer Protection or an appeal to the SARC under these guidelines.

Filing a Request for Review With the FDIC Division of Depositor and Consumer Protection

An institution may file a request for review of a material supervisory determination with the Director, Division of Depositor and Consumer Protection, 550 17th Street, NW, Room F-4076, Washington, DC 20429, within 60 calendar days following the institution’s receipt of a report of examination containing a material supervisory determination or other written communication of a material supervisory determination.  A request for review must be in writing and must include:

1. A detailed description of the issues in dispute, the surrounding circumstances, the institution’s position regarding the dispute and any arguments to support that position (including citation of any relevant statute, regulation, policy statement or other authority), how resolution of the dispute would materially affect the institution, and whether a good faith effort was made to resolve the dispute with the on-site examiner and the Regional Office; and
2. A statement that the institution’s board of directors has considered the merits of the request and has authorized that it be filed.

The Division Director will review the appeal for consistency with the policies, practices, and mission of the FDIC and the overall reasonableness of, and the support offered for, the positions advanced.  The Division Director will issue a written determination on the request for review, setting forth the grounds for that determination, within 45 days of receipt of the request.  No appeal to the SARC will be allowed unless an institution has first filed a timely request for review with the appropriate Division Director.

Appeal to the SARC

An institution that does not agree with the written determination rendered by the Division Director must appeal that determination to the SARC within 30 calendar days from the date of that determination.  The Director’s determination will inform the institution of the 30-day time period for filing with the SARC and will provide the mailing address for any appeal the institution may wish to file.  Failure to file within the 30‑day time limit may result in denial of the appeal by the SARC.  If the Division Director recommends that an institution receive relief that the Director lacks delegated authority to grant, the Director may, with the approval of the Chairperson of the SARC, transfer the matter directly to the SARC without issuing a determination.  Notice of such a transfer will be provided to the institution.  The Division Director may also request guidance from the SARC Chairperson as to procedural or other questions relating to any request for review.

Filing with the SARC

An appeal to the SARC will be considered filed if the written appeal is received by the FDIC within 30 calendar days from the date of the Division Director’s written determination or if the written appeal is placed in the U.S. mail within that 30-day period.  If the 30th day after the date of the Division Director’s written determination is a Saturday, Sunday, or Federal holiday, filing may be made on the next business day.  The appeal should be sent to the address indicated on the Division Director’s determination being appealed.

Contents of Appeal

The appeal should be labeled to indicate that it is an appeal to the SARC and should contain the name, address, and telephone number of the institution and any representative, as well as a copy of the Division Director’s determination being appealed.  If oral presentation is sought, that request should be included in the appeal.  Only matters previously reviewed at the division level, resulting in a written determination or direct referral to the SARC, may be appealed to the SARC.  Evidence not presented for review to the Division Director may be submitted to the SARC only if authorized by the SARC Chairperson.  The institution should set forth all of the reasons, legal and factual, why it disagrees with the Division Director’s determination.  Nothing in the SARC administrative process shall create any discovery or other such rights.

Burden of Proof

The burden of proof as to all matters at issue in the appeal, including timeliness of the appeal if timeliness is at issue, rests with the institution.

Oral Presentation

The SARC may, in its discretion, whether or not a request is made, determine to allow an oral presentation.  The SARC generally grants a request for oral presentation if it determines that oral presentation is likely to be helpful or would otherwise be in the public interest.  Notice of the SARC’s determination to grant or deny a request for oral presentation will be provided to the institution.  If oral presentation is held, the institution will be allowed to present its positions on the issues raised in the appeal and to respond to any questions from the SARC.  The SARC may also require that FDIC staff participate as the SARC deems appropriate.

Dismissal and Withdrawal

An appeal may be dismissed by the SARC if it is not timely filed, if the basis for the appeal is not discernable from the appeal, or if the institution moves to withdraw the appeal.  An appeal may be rejected if the right to appeal has been cut off.

Scope of Review and Decision

The SARC will review the appeal for consistency with the policies, practices and mission of the FDIC and the overall reasonableness of and the support offered for the positions advanced.  The SARC will notify the institution, in writing, of its decision concerning the disputed material supervisory determination(s) within 45 days from the date the SARC meets to consider the appeal, which meeting will be held within 90 days from the date of the filing of the appeal.  SARC review will be limited to the facts and circumstances as they existed prior to, or at the time the material supervisory determination was made, even if later discovered, and no consideration will be given to any facts or circumstances that occur or corrective action taken after the determination was made.  The SARC may reconsider its decision only on a showing of an intervening change in the controlling law or the availability of material evidence not reasonably available when the decision was issued.

Publication of Decisions

SARC decisions will be published as soon as practicable, and the published decisions will be redacted to avoid disclosure of exempt information.  In cases in which redaction is deemed to be insufficient to prevent improper disclosure, published decisions may be presented in summary form.  Published SARC decisions may be cited as precedent in appeals to the SARC.  Annual reports on Division Directors’ decisions with respect to institutions’ requests for review of material supervisory determinations also will be published.

SARC Guidelines Generally

Appeals to the SARC will be governed by these guidelines.  The SARC will retain the discretion to waive any provision of the guidelines for good cause.  The SARC may adopt supplemental rules governing its operations; order that material be kept confidential; and consolidate similar appeals.

Limitation on Agency Ombudsman

The subject matter of a material supervisory determination for which either an appeal to the SARC has been filed, or a final SARC decision issued is not eligible for consideration by the Ombudsman.

Coordination With State Regulatory Authorities

In the event that a material supervisory determination subject to a request for review is the joint product of the FDIC and a State regulatory authority, the Director, Division of Depositor and Consumer Protection, will promptly notify the appropriate State regulatory authority of the request, provide the regulatory authority with a copy of the institution’s request for review and any other related materials, and solicit the regulatory authority’s views regarding the merits of the request before making a determination.  In the event that an appeal is subsequently filed with the SARC, the SARC will notify the institution and the State regulatory authority of its decision.   Once the SARC has issued its determination, any other issues that may remain between the institution and the State authority will be left to those parties to resolve.

Effect on Supervisory or Enforcement Actions

The use of the procedures set forth in these guidelines by any institution will not affect, delay, or impede any formal or informal supervisory or enforcement action in progress or affect the FDIC’s authority to take any supervisory or enforcement action against that institution.

Effect on Applications or Requests for Approval

Any application or request for approval made to the FDIC by an institution that has appealed a material supervisory determination that relates to, or could affect the approval of, the application or request will not be considered until a final decision concerning the appeal is made unless otherwise requested by the institution.

Prohibition on Examiner Retaliation

The FDIC has an experienced examination workforce and is proud of its professionalism and dedication.  FDIC policy prohibits any retaliation, abuse, or retribution by an agency examiner or any FDIC personnel against an institution.  Such behavior against an institution that appeals a material supervisory determination constitutes unprofessional conduct and will subject the examiner or other personnel to appropriate disciplinary or remedial action.  Institutions that believe they have been retaliated against are encouraged to contact the Regional Director for the appropriate FDIC region.  Any institution that believes or has any evidence that it has been subject to retaliation may file a complaint with the Director, Office of the Ombudsman, Federal Deposit Insurance Corporation, 550 17^th Street NW, Washington, DC 20429, explaining the circumstances and the basis for such belief or evidence and requesting that the complaint be investigated and appropriate disciplinary or remedial action taken.  The Office of the Ombudsman will work with the appropriate Division Director to resolve the allegation of retaliation.

References

FIL-42-2017: Revised Guidelines for Appeals of Material Supervisory Determinations

FIL-51-2016: Reminder on FDIC Examination Findings

FIL-113-2004: Guidelines for Appeals of Material Supervisory Determinations Guidelines for Appeals of Deposit Insurance Assessment Determinations.

The FDIC conducts examinations of institutions it supervises at intervals established by FDIC policy. Generally, newly chartered insured institutions or institutions that changed charters and are newly supervised by the FDIC receive a visitation within the first 12 months of operation/conversion and a full-scope examination within the first 24 months. To foster open dialogue and early communication during the initial stage of operations as a FDIC-supervised institution, the institution’s supervisory region will arrange an introductory meeting with management prior to the initial visitation. After the first examination, the institution will follow the applicable Examination Frequency Schedule. The FDIC will conduct examinations at other institutions at intervals outlined in the Examination Frequency Schedule that sets examination intervals by an institution’s total asset size and the ratings assigned during the most recent Consumer Compliance examination and Community Reinvestment Act (CRA) evaluation.

When scheduling an examination, the objectives are to: 

• Target examinations and supervisory efforts where risk of consumer harm is greatest;
• Allocate appropriate examination resources; and
• Conduct concurrent examinations, when requested by the bank, if practical.

Examination and Visitation Frequency

The Initial Examination Frequency Schedule for newly chartered insured institutions and charter conversions is set forth below in Table 1. Examination Frequency Schedules, based on an institution’s total assets from the two previous year-end Call Reports, are set forth below in Tables 2-4. Table 2 applies if an institution’s total assets are $350 million or less for either of the two previous year-end Call Reports. Table 3 applies if an institution’s total assets are $3 billion or less for either of the two previous year-end Call Reports and total assets are over $350 million for both of the two previous year-end Call Reports. Table 4 applies if an institution’s total assets are over $3 billion for both of the two previous year-end Call Reports.

As set forth in Tables 2-4, institutions will generally be on an examination cycle of 66-78 months, 54-66 months, or 24-36 months, depending on their asset size. Examination cycles are based on the date of the last joint Consumer Compliance examination/CRA evaluation. For institutions with a “3”, “4” or “5” Consumer Compliance rating and a CRA rating of “Needs to Improve” or “Substantial Noncompliance”, the joint examination cycle will be shorter (either 1-12 months or 12-24 months).

The examination cycle will not reset if there is an intervening supervisory activity (such as a Consumer Compliance-Only examination, CRA-only evaluation, or visitation). For example, a $2 billion institution falls under Table 3 and will have a 54-66 month joint Consumer Compliance examination/CRA evaluation cycle. If the bank receives a “3” Consumer Compliance rating and a “Satisfactory” CRA rating, the institution will have a Compliance Only examination between 12-24 months. If the institution receives another “3” (or “4” or “5”), at that Consumer Compliance Only examination, it will have another Consumer Compliance Only examination between the next 12-24 months. Regardless of the rating at the Compliance Only examination, the next joint Consumer Compliance examination/CRA evaluation will be 54-66 months from the last joint Consumer Compliance examination/CRA evaluation and not 54-66 months from the Compliance Only examination.

For institutions on an examination cycle of 66-78 months or 54-66 months, with no targeted Consumer Compliance examination or CRA evaluation, examiners will conduct a mid-point risk analysis of the institution and determine if an intervening supervisory activity, such as a targeted visitation, is needed. Examiners will conduct an intervening supervisory activity only when there is sufficient, articulable reason why such review cannot wait until the next regularly scheduled joint examination. Typically, Consumer Compliance and CRA ratings will not change at a visitation, but if the visitation results in a rating change, the Examination Frequency Schedule noted below will still apply. The FDIC may also schedule joint Consumer Compliance examinations/CRA evaluations earlier than the standard schedule, when warranted, dependent upon supervisory concerns or other factors, though such deviations are expected to be rare.

Adversely rated institutions (institutions not rated a “1” or “2” for Consumer Compliance and “Outstanding” or “Satisfactory” or CRA) will encounter more frequent supervisory activities (examination, evaluation, or visitation). Such activities will not reset the examination cycle. However, for institutions that have been adversely rated during the examination cycle, the next regular joint Consumer Compliance examination/CRA evaluation may be scheduled earlier, as appropriate, for supervisory efficiency.

Under the Gramm-Leach-Bliley Act, a financial institution with aggregate assets of $250 million or less may be subject to more or less frequent CRA evaluations because of a determination of “reasonable cause.” Some examples of when an evaluation may be more frequent include where significant fair lending violations were identified during a Consumer Compliance-only examination that would affect overall CRA performance, or receipt of credible complaints indicating deterioration in an institution’s CRA performance. Some examples of when an evaluation may be delayed include when an affiliated institution requests to be examined concurrently, or where an institution is under new data collection or reporting requirements.

Concurrent Examinations

The FDIC conducts concurrent Consumer Compliance/CRA, risk management, and specialty examinations to accommodate the preferences of the bank, unless doing so would be impractical or inefficient. Examinations of banks subject to Consumer Financial Protection Bureau (CFPB) supervision will be coordinated with the requirements of Section 1025(e) of the Dodd-Frank Act.

NOTE: To print the full table, adjust the scale or change the page layout to landscape.

Introduction

The FDIC assigns consumer compliance ratings to institutions it supervises pursuant to the Uniform Interagency Consumer Compliance Rating System (CC Rating System) approved by the Federal Financial Institutions Examination Council (FFIEC) in 2016 and effective on March 31, 2017.  The CC Rating System is a supervisory policy for evaluating financial institutions’ adherence to consumer protection requirements. It is composed of guidance and definitions which are contained in this section of the manual.

The primary purpose of the CC Rating System is to ensure that regulated financial institutions are evaluated in a comprehensive and consistent manner and that supervisory resources are appropriately focused on areas exhibiting risk of consumer harm and on institutions that warrant elevated supervisory attention.  The CC Rating System serves as a useful tool for summarizing the compliance position of individual institutions.

Under the CC Rating System, each financial institution is assigned a consumer compliance rating. The CC Rating System is based upon a scale of 1 through 5 in increasing order of supervisory concern.

FFIEC Guidance on the Uniform Interagency Consumer Compliance Rating System

FFIEC¹ member agencies (Agencies) promote compliance with federal consumer protection laws and regulations through supervisory and outreach programs.² The Agencies engage in consumer compliance supervision to assess whether a financial institution is meeting its responsibility to comply with these requirements.   

The CC Rating System provides a general framework for assessing risks during the supervisory process using certain compliance factors and assigning an overall consumer compliance rating to each federally regulated financial institution.³  The primary purpose of the CC Rating System is to ensure that regulated financial institutions are evaluated in a comprehensive and consistent manner, and that supervisory resources are appropriately focused on areas exhibiting risk of consumer harm and on institutions that warrant elevated supervisory attention.   

The CC Rating System is composed of guidance and definitions.  The guidance provides examiners with direction on how to use the definitions when assigning a consumer compliance rating to an institution. The definitions consist of qualitative descriptions for each rating category and include compliance management system (CMS) elements reflecting risk control processes designed to manage consumer compliance risk and considerations regarding violations of laws, consumer harm, and the size, complexity, and risk profile of an institution. The consumer compliance rating reflects the effectiveness of an institution’s CMS to ensure compliance with consumer protection laws and regulations and reduce the risk of harm to consumers.

Principles of the Interagency CC Rating System

The Agencies developed the following principles to serve as a foundation for the CC Rating System.

Risk-based.  Recognize and communicate clearly that CMS vary based on the size, complexity, and risk profile of supervised institutions.

Transparent.  Provide clear distinctions between rating categories to support consistent application by the Agencies across supervised institutions. Reflect the scope of the review that formed the basis of the overall rating.

Actionable.  Identify areas of strength and direct appropriate attention to specific areas of weakness, reflecting a risk-based supervisory approach. Convey examiners’ assessment of the effectiveness of an institution’s CMS, including its ability to prevent consumer harm and ensure compliance with consumer protection laws and regulations.

Incent Compliance.  Incent the institution to establish an effective consumer compliance system across the institution and to identify and address issues promptly, including self-identification and correction of consumer compliance weaknesses.  Reflect the potential impact of any consumer harm identified in examination findings.

Five-Level Rating Scale

The CC Rating System is based upon a numeric scale of 1 through 5 in increasing order of supervisory concern.  Thus, 1 represents the highest rating and consequently the lowest degree of supervisory concern, while 5 represents the lowest rating and the most critically deficient level of performance, and therefore, the highest degree of supervisory concern.⁴ Ratings of 1 or 2 represent satisfactory or better performance.  Ratings of 3, 4, or 5 indicate performance that is less than satisfactory.  Consistent with the previously described Principles, the rating system incents a financial institution to establish an effective CMS across the institution, to self-identify risks, and to take the necessary actions to reduce the risk of non-compliance and consumer harm.

• The highest rating of 1 is assigned to a financial institution that maintains a strong CMS and takes action to prevent violations of law and consumer harm.
• A rating of 2 is assigned to a financial institution that maintains a CMS that is satisfactory at managing consumer compliance risk in the institution’s products and services and at substantially limiting violations of law and consumer harm.
• A rating of 3 reflects a CMS deficient at managing consumer compliance risk in the institution’s products and services and at limiting violations of law and consumer harm.
• A rating of 4 reflects a CMS seriously deficient at managing consumer compliance risk in the institution’s products and services and/or at preventing violations of law and consumer harm.  “Seriously deficient” indicates fundamental and persistent weaknesses in crucial CMS elements and severe inadequacies in core compliance areas necessary to operate within the scope of statutory and regulatory consumer protection requirements and to prevent consumer harm.
• A rating of 5 reflects a CMS critically deficient at managing consumer compliance risk in the institution’s products and services and/or at preventing violations of law and consumer harm.  “Critically deficient” indicates an absence of crucial CMS elements and a demonstrated lack of willingness or capability to take the appropriate steps necessary to operate within the scope of statutory and regulatory consumer protection requirements and to prevent consumer harm.

CC Rating System Categories and Assessment Factors

CC Rating System – Categories

The CC Rating System is organized under three broad categories:

1. Board and Management Oversight,
2. Compliance Program, and
3. Violations of Law and Consumer Harm.

The Consumer Compliance Rating Definitions below list the assessment factors considered within each category, along with narrative descriptions of performance.

The first two categories, Board and Management Oversight and Compliance Program, are used to assess a financial institution’s CMS.  As such, examiners should evaluate the assessment factors within these two categories commensurate with the institution’s size, complexity, and risk profile.  All institutions, regardless of size, should maintain an effective CMS.  The sophistication and formality of the CMS typically will increase commensurate with the size, complexity, and risk profile of the entity.

Additionally, compliance expectations contained within the narrative descriptions of these two categories extend to third-party relationships into which the financial institution has entered.  There can be certain benefits to financial institutions engaging in relationships with third parties, including gaining operational efficiencies or an ability to deliver additional products and services, but such arrangements also may expose financial institutions to risks if not managed effectively.  The prudential agencies, the CFPB, and some states have issued guidance describing expectations regarding oversight of third-party relationships.⁵ While an institution’s management may make the business decision to outsource some or all of the operational aspects of a product or service, the institution cannot outsource the responsibility for complying with laws and regulations or managing the risks associated with third-party relationships.

As noted in the Consumer Compliance Rating Definitions, examiners should evaluate activities conducted through third-party relationships as though the activities were performed by the institution itself. Examiners should review a financial institution’s management of third-party relationships and servicers as part of its overall compliance program.

The third category, Violations of Law and Consumer Harm, includes assessment factors that evaluate the dimensions of any identified violation or consumer harm.  Examiners should weigh each of these four factors – root cause, severity, duration, and pervasiveness – in evaluating relevant violations of law and any resulting consumer harm.

Board and Management Oversight – Assessment Factors

Under Board and Management Oversight, the examiner should assess the financial institution’s board of directors and management, as appropriate for their respective roles and responsibilities, based on the following assessment factors:

• oversight of and commitment to the institution’s CMS;
• effectiveness of the institution’s change management processes, including responding timely and satisfactorily to any variety of change, internal or external, to the institution;
• comprehension, identification, and management of risks arising from the institution’s products, services, or activities; and
• self-identification of consumer compliance issues and corrective action undertaken as such issues are identified.

Compliance Program – Assessment Factors

Under Compliance Program, the examiner should assess other elements of an effective CMS, based on the following assessment factors:

• whether the institution’s policies and procedures are appropriate to the risk in the products, services, and activities of the institution;
• the degree to which compliance training is current and tailored to risk and staff responsibilities;
• the sufficiency of the monitoring and, if applicable, audit to encompass compliance risks throughout the institution; and
• the responsiveness and effectiveness of the consumer complaint resolution process.

Violations of Law and Consumer Harm – Assessment Factors

Under Violations of Law and Consumer Harm, the examiner should analyze the following assessment factors:

• the root cause, or causes, of any violations of law identified during the examination;
• the severity of any consumer harm resulting from violations;
• the duration of time over which the violations occurred; and
• the pervasiveness of the violations.

As a result of a violation of law, consumer harm may occur.  While many instances of consumer harm can be quantified as a dollar amount associated with financial loss, such as charging higher fees for a product than was initially disclosed, consumer harm may also result from a denial of an opportunity.  For example, a consumer could be harmed when a financial institution denies the consumer credit or discourages an application in violation of the Equal Credit Opportunity Act,⁶ whether or not there is resulting financial harm.

This category of the Consumer Compliance Rating Definitions defines four factors by which examiners can assess violations of law and consumer harm.

Root Cause.  The Root Cause assessment factor analyzes the degree to which weaknesses in the CMS gave rise to the violations.  In many instances, the root cause of a violation is tied to a weakness in one or more elements of the CMS.  Violations that result from critical deficiencies in the CMS evidence a critical absence of management oversight and are of the highest supervisory concern.

Severity.  The Severity assessment factor of the Consumer Compliance Rating Definitions weighs the type of consumer harm, if any, that resulted from violations of law.  More severe harm results in a higher level of supervisory concern under this factor. For example, some consumer protection violations may cause significant financial harm to a consumer, while other violations may cause negligible harm, based on the specific facts involved.

Duration.  The Duration assessment factor considers the length of time over which the violations occurred. Violations that persist over an extended period of time will raise greater supervisory concerns than violations that occur for only a brief period of time.  When violations are brought to the attention of an institution’s management and management allows those violations to remain unaddressed, such violations are of the highest supervisory concern.

Pervasiveness.  The Pervasiveness assessment factor evaluates the extent of the violation(s) and resulting consumer harm, if any. Violations that affect a large number of consumers will raise greater supervisory concern than violations that impact a limited number of consumers.  If violations become so pervasive that they are considered to be widespread or present in multiple products or services, the institution’s performance under this factor is of the highest supervisory concern.

Self-Identification of Violations of Law and Consumer Harm

Strong compliance programs are proactive.  They promote consumer protection by preventing, self-identifying, and addressing compliance issues in a proactive manner.  Accordingly, the CC Rating System provides incentives for such practices through the definitions associated with a 1 rating.

The Agencies believe that self-identification and prompt correction of violations of law reflect strengths in an institution’s CMS.  A robust CMS appropriate for the size, complexity and risk profile of an institution’s business often will prevent violations or will facilitate early detection of potential violations.  This early detection can limit the size and scope of consumer harm.  Moreover, self-identification and prompt correction of serious violations represents concrete evidence of an institution’s commitment to responsibly address underlying risks.  In addition, appropriate corrective action, including both correction of programmatic weaknesses and full redress for injured parties, limits consumer harm and prevents violations from recurring in the future.  Thus, the CC Rating System recognizes institutions that consistently adopt these strategies as reflected in the Consumer Compliance Rating Definitions.

Evaluating Performance Using the CC Rating Definitions

The consumer compliance rating is derived through an evaluation of the financial institution’s performance under each of the assessment factors described above. The consumer compliance rating reflects the effectiveness of an institution’s CMS to identify and manage compliance risk in the institution’s products and services and to prevent violations of law and consumer harm, as evidenced by the financial institution’s performance under each of the assessment factors.

The consumer compliance rating reflects a comprehensive evaluation of the financial institution’s performance under the CC Rating System by considering the categories and assessment factors in the context of the size, complexity, and risk profile of an institution.  It is not based on a numeric average or any other quantitative calculation.  Specific numeric ratings will not be assigned to any of the 12 assessment factors. Thus, an institution need not achieve a satisfactory assessment in all categories in order to be assigned an overall satisfactory rating.  Conversely, an institution may be assigned a less than satisfactory rating even if some of its assessments were satisfactory.

The relative importance of each category or assessment factor may differ based on the size, complexity, and risk profile of an individual institution.  Accordingly, one or more category or assessment factor may be more or less relevant at one financial institution as compared to another institution.  While the expectations for compliance with consumer protection laws and regulations are the same across institutions of varying sizes, the methods for accomplishing an effective CMS may differ across institutions.

The evaluation of an institution’s performance within the Violations of Law and Consumer Harm category of the CC Rating Definitions considers each of the four assessment factors:  Root Cause, Severity, Duration, and Pervasiveness.  At the levels of 4 and 5 in this category, the distinctions in the definitions are focused on the root cause assessment factor rather than Severity, Duration, and Pervasiveness.  This approach is consistent with the other categories where the difference between a 4 and a 5 is driven by the institution’s capacity and willingness to maintain a sound consumer compliance system.

In arriving at the final rating, the examiner must balance potentially differing conclusions about the effectiveness of the financial institution’s CMS over the individual products, services, and activities of the organization.  Depending on the relative materiality of a product line to the institution, an observed weakness in the management of that product line may or may not impact the conclusion about the institution’s overall performance in the associated assessment factor(s).  For example, serious weaknesses in the policies and procedures or audit program of the mortgage department at a mortgage lender would be of greater supervisory concern than those same gaps at an institution that makes very few mortgage loans and strictly as an accommodation.  Greater weight should apply to the financial institution’s management of material products with significant potential consumer compliance risk.

An institution may receive a less than satisfactory rating even when no violations were identified, based on deficiencies or weaknesses identified in the institution’s CMS.  For example, examiners may identify weaknesses in elements of the CMS in a new loan product. Because the presence of those weaknesses left unaddressed could result in future violations of law and consumer harm, the CMS deficiencies could impact the overall consumer compliance rating, even if no violations were identified.

Similarly, an institution may receive a 1 or 2 rating even when violations were present, if the CMS is commensurate with the risk profile and complexity of the institution.  For example, when violations involve limited impact on consumers, were self-identified, and resolved promptly, the evaluation may result in a 1 or 2 rating.  After evaluating the institution’s performance in the two CMS categories, Board and Management Oversight and Compliance Program, and the dimensions of the violations in the third category, the examiner may conclude that the overall strength of the CMS and the nature of observed violations viewed together do not present significant supervisory concerns.

Assignment of Ratings by Supervisor(s)

The prudential regulators will continue to assign and update, as appropriate, consumer compliance ratings for institutions they supervise, including those with total assets of more than $10 billion.⁷  As a member of the FFIEC, the CFPB will also use the CC Rating System to assign a consumer compliance rating, as appropriate, for institutions with total assets of more than $10 billion, as well as for nonbanks for which it has jurisdiction regarding the enforcement of Federal consumer financial laws as defined under the Dodd-Frank Act.⁸  The prudential regulators will take into consideration any material supervisory information provided by the CFPB, as that information relates to covered supervisory activities or covered examinations.⁹  Similarly, the CFPB will take into consideration any material supervisory information provided by prudential regulators in appropriate supervisory situations.

State regulators maintain supervisory authority to conduct examinations of state-chartered depository institutions and licensed entities.  As such, states may assign consumer compliance ratings to evaluate compliance with both state and federal laws and regulations.  States will collaborate and consider material supervisory information from other state and federal regulatory agencies during the course of examinations.

Consumer Compliance Examinations Violation Codes

Advertisement of Membership – Subpart A – Advertisement of Membership

ADV-MEM 328.2(a)

The Federal Deposit Insurance Act (12 U.S.C. §§ 1818, 1819(Tenth), and 1828(a)), as implemented by the Advertisement of Membership rule, 12 C.F.R. § 328.2(a), requires a financial institution to display the official sign continuously at each station or window where insured deposits are usually and normally received in the institution’s principal place of business and in all its branches, except as permitted in § 328.2(a)(1)(ii), (a)(2), and (a)(3).

ADV-MEM 328.3(b)-(c)

The Federal Deposit Insurance Act (12 U.S.C. §§ 1818, 1819(Tenth), and 1828(a)), as implemented by the Advertisement of Membership rule, 12 C.F.R. § 328.3(b) and (c), requires a financial institution to use the official advertising statement, as defined in § 328.3(b), which shall be of such size and print to be clearly legible.  The official advertising statement shall be used, in all advertisements that either promote deposit products and services or promote non-specific banking products and services offered by the institution, except as provided in § 328.3(d).

ADV-MEM 328.3(e)

The Federal Deposit Insurance Act (12 U.S.C. §§ 1818, 1819(Tenth), and 1828(a)), as implemented by the Advertisement of Membership rule, 12 C.F.R. § 328.3(e), prohibits a financial institution from including the official advertising statement, or any other statement or symbol implying or suggesting the existence of Federal deposit insurance, in any advertisement relating solely to non-deposit products and hybrid products. In mixed advertisements, a financial institution must clearly segregate the official advertising statement as provided in § 328.3(e)(4).

ADV-MEM 328.4

The Federal Deposit Insurance Act (12 U.S.C. §§ 1818, 1819(Tenth), and 1828(a)), as implemented by the Advertisement of Membership rule, 12 C.F.R. § 328.4, prohibits a financial institution from receiving deposits at any teller station or window where a noninsured institution receives deposits or similar liabilities, except for deposits received at a Remote Service Facility.

Advertisement of Membership – Subpart B – False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo

ADV-MEM 328.102(a)

The Federal Deposit Insurance Act (12 U.S.C. §§ 1818, 1819(Tenth), 1820(c) and 1828(a)), as implemented by the Advertisement of Membership rule, 12 C.F.R. § 328.102(a), prohibits any person from representing or implying that any Uninsured Financial Product is insured or guaranteed by the FDIC by using FDIC-Associated Terms as part of any business name or firm name of any person; or, by using FDIC-Associated Terms or Images as part of an advertisement, solicitation, or other publication or dissemination as provided for in (a)(1) and (a)(2) as applicable under (a)(3).

[ADV-MEM 328.102(a)]

ADV-MEM 328.102(b)

The Federal Deposit Insurance Act (12 U.S.C. §§ 1818, 1819(Tenth), 1820(c) and 1828(a)), as implemented by the Advertisement of Membership rule, 12 C.F.R. § 328.102(b), prohibits a person from knowingly making a false or misleading representation about deposit insurance, as provided for in (b)(1) through (b)(6) of this subsection.

[ADV-MEM 328.102(b)]

Branch Closing

BR-CLOSING 42(No Subsection)

Section 42 of the Federal Deposit Insurance Act of 1950 (12 U.S.C. § 1831r-1) requires that all insured depository institutions adopt written policies for branch closings.  Financial institutions are also required to give notice to the appropriate federal agency and customers no later than 90 days before they close a branch. The notice provided to the appropriate Federal banking agency must include a detailed statement of the reasons for the decision to close the branch and statistical or other information in support of such reasons. The notice provided to customers must be included in a regular account statement or a separate mailing, and in the case of an interstate bank that proposes to close a branch in a low- or moderate-income area, the notice must include the mailing address of the FDIC and a statement that comments on the proposed closing may be mailed to the FDIC. Further, this section requires institutions to post a notice in a conspicuous manner on the premises of the branch proposed to be closed not less than 30 days before the proposed closing.

Children's Online Privacy Protection

COPPA 312.4(a)

The Children’s Online Privacy Protection Act of 1998 (15 U.S.C. § 6501 et seq.), as implemented by the Children’s Online Privacy Protection Rule, 16 C.F.R. § 312.4(a), requires an operator to provide a notice and obtain verifiable parental consent prior to collecting, using, or disclosing personal information from children.  The notice must be clearly and understandably written, complete, and must not contain unrelated, confusing, or contradictory materials.

COPPA 312.4(b)-(d)

The Children’s Online Privacy Protection Act of 1998 (15 U.S.C. § 6501 et seq.), as implemented by the Children’s Online Privacy Protection Rule, 16 C.F.R. § 312.4(b) through (d), requires an operator: to make reasonable efforts to ensure that a parent of a child receives direct notice of the practices with regard to the collection, use, or disclosure of personal information from children, including notice of any material change in the collection, use, or disclosure practices to which the parent has previously consented as provided in § 312.4(b); to provide a direct notice to the parent that meets the content requirements of § 312.4(c); and to post a prominent and clearly labeled link to an online notice of its information practices with regard to children, on the home or landing page or screen of its Web site or online service, and at each area of the Web site or online service where personal information is collected from children as prescribed by § 312.4(d).

As set out in § 312.3, actual knowledge of a violation of this provision is considered an unfair and deceptive act or practice under section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)).

COPPA 312.5     

The Children’s Online Privacy Protection Act of 1998 (15 U.S.C. § 6501 et seq.), as implemented by the Children’s Online Privacy Protection Rule, 16 C.F.R. § 312.5, requires an operator to obtain verifiable parental consent, as prescribed by § 312.5(b), before any collection, use, or disclosure of personal information from children, and give the parent the option to consent to the collection and use of the child’s personal information without consenting to disclosure of his or her personal information to third parties.

As set out in § 312.3, actual knowledge of a violation of this provision is considered an unfair and deceptive act or practice under section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)).

COPPA 312.6    

The Children’s Online Privacy Protection Act of 1998 (15 U.S.C. § 6501 et seq.), as implemented by the Children’s Online Privacy Protection Rule, 16 C.F.R. § 312.6, requires an operator to provide, upon request of a parent whose child has provided personal information to a Web site or online service, a description of specific types or categories of personal information collected; the opportunity, at any time, to refuse to permit the operator’s further use or future online collection of information from that child and to direct the operator to delete the child’s information; and a means of reviewing any personal information collected from the child that is not unduly burdensome to the parent.  The means employed by the operator must ensure that the requester is a parent of the child, taking into account available technology.

As set out in § 312.3, actual knowledge of a violation of this provision is considered an unfair and deceptive act or practice under section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)).

COPPA 312.7      

The Children’s Online Privacy Protection Act of 1998 (15 U.S.C. § 6501 et seq.), as implemented by the Children’s Online Privacy Protection Rule, 16 C.F.R. § 312.7, prohibits an operator from conditioning a child’s participation in a game, the offering of a prize, or another activity on the child’s disclosing more personal information than is reasonably necessary to participate in such activity.

As set out in § 312.3, actual knowledge of a violation of this provision is considered an unfair and deceptive act or practice under section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)).

COPPA 312.8     

The Children’s Online Privacy Protection Act of 1998 (15 U.S.C. § 6501 et seq.), as implemented by the Children’s Online Privacy Protection Rule, 16 C.F.R. § 312.8, requires an operator to establish and maintain reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children.  In addition, the operator must take reasonable steps to release children’s personal information only to service providers and third parties who are capable of maintaining the confidentiality, security, and integrity of such information, and who provide assurances that they will maintain the information in such a manner.

As set out in § 312.3, actual knowledge of a violation of this provision is considered an unfair and deceptive act or practice under section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)).

COPPA 312.10

The Children’s Online Privacy Protection Act of 1998 (15 U.S.C. § 6501 et seq.), as implemented by the Children’s Online Privacy Protection Rule, 16 C.F.R. § 312.10, requires an operator to retain personal information collected online from a child for only as long as is reasonably necessary to fulfill the purpose for which the information was collected, and to delete such information using reasonable measures to protect against unauthorized access to, or use of, the information in connection with its deletion.

Community Reinvestment Act

CRA 345.41       

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.41, requires a financial institution to delineate one or more assessment areas within which the FDIC evaluates the bank's record of helping to meet the credit needs of its community, in accordance with the requirements of § 345.41(a) through (g), as applicable.

CRA 345.42(a)-(b)            

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.42 (a) and (b), requires a financial institution to collect, and maintain in machine readable form until the completion of its next CRA examination, the following data for each small business or small farm loan originated or purchased:

(1) a unique number or symbol to identify the relevant loan file;

(2) the loan amount at origination;

(3) the loan location; and

(4) an indicator of whether the loan was to a business or farm with gross annual revenues of $1 million or less.

A financial institution that is not a small bank and was not a small bank during the prior calendar year is required to report annually by March 1 to the FDIC, the loan information detailed in § 345.42(b)(1) through (b)(3) for the prior calendar year, in machine readable form.

CRA 345.42(g)    

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.42(g), requires a financial institution that is not a small bank and was not a small bank during the prior calendar year to report to the FDIC annually by March 1 a list of each assessment area showing the geographies within the area.

CRA 345.43(a)  

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(a), requires a financial institution to maintain a public file that includes the following information:

(1)  all written comments received from the public for the current year and each of the prior two calendar years, along with the financial institution’s response specifically related to the bank’s performance in helping to meet community credit needs;

(2) a copy of the public section of the most recent CRA Performance Evaluation, which must be placed in the public file within 30 business days after receipt from the FDIC;

(3) a list of its branches, their street addresses and geographies;

(4) a list of branches opened or closed during the current year and each of the prior two calendar years, their street addresses, and geographies;

(5) a list of services (including hours of operation, available loan and deposit products, and transaction fees) generally offered and descriptions of material differences in the availability or cost of services at branches, if any;

(6) a map of each assessment area showing the boundaries of the area and identifying the geographies contained within the area, either on the map or in a separate list; and

(7) any other information the bank chooses.

CRA 345.43(b)(1)             

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(b)(1), requires a financial institution, that is not a small bank and was not a small bank in the prior calendar year, to include in its public file, regarding consumer loans considered under the lending test, information contained in § 345.43(b)(1)(i)(A) through (b)(1)(i)(C).  A financial institution, that is not a small bank and was not a small bank in the prior calendar year, is required to include its CRA Disclosure Statement in the public file within three business days of its receipt from the FDIC.

CRA 345.43(b)(2)             

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(b)(2), requires a financial institution that reports HMDA data, to include in its public file a written notice that its HMDA Disclosure Statement may be obtained on the Consumer Financial Protection Bureau’s (“Bureau’s”) Web site at www.consumerfinance.gov/hmda.  In addition, a financial institution that elected to have the FDIC consider the mortgage lending of an affiliate must include in its public file the name of the affiliate and a written notice that the affiliate’s HMDA Disclosure Statement may be obtained at the Bureau’s Web site.  The financial institution must place the written notice(s) in its public file within three business days after receiving notification from the Federal Financial Institutions Examination Council that the disclosure statements are available.

CRA 345.43(b)(3)

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(b)(3), requires a financial institution, that is a small bank or was a small bank in the prior calendar year, to include its loan-to-deposit ratio for each quarter of the prior calendar year in its public file.  If the small financial institution has elected to be evaluated under the lending, investment, and services tests, the small institution must also include the information required for other banks as detailed in § 345.43(b)(1).

CRA 345.43(b)(4)

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(b)(4), requires a financial institution that is approved to be assessed under a strategic plan to include a copy of that plan in its public file.

CRA 345.43(b)(5)             

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(b)(5), requires a financial institution that received a less than satisfactory rating during its most recent examination to include in its public file a description of its current efforts to improve its performance in helping to meet the credit needs of its entire community.  The financial institution is required to update the description quarterly.

CRA 345.43(c)

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(c), requires a financial institution to make all information in the public file available for public inspection upon request and at no cost, at the main office and, if an interstate bank, at one branch office in each state.  A financial institution is also required to make available the following information at each branch: (i) a copy of the public section of its most recent CRA Performance Evaluation and a list of services provided by the branch, and (ii) all of the information in the public file relating to the assessment area in which the branch is located within five calendar days of the request.

CRA 345.43(d)  

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(d), requires a financial institution, upon request, to provide copies, either on paper or in another form acceptable to the person making the request, of the information in its public file.  A reasonable fee may be charged that does not exceed the cost of copying and mailing (if applicable).

CRA 345.43(e)

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.43(e), requires a financial institution to ensure that all applicable information in its public file is current as of April 1 of each year, except as otherwise provided in this section.

CRA 345.44       

The Community Reinvestment Act (12 U.S.C. § 2901 et seq.), as implemented by the FDIC Rules and Regulations, 12 C.F.R. § 345.44, requires a financial institution to provide in the public lobby of its main office and each of its branches, the appropriate public notice set forth in Appendix B of this part.

Consumer Leasing

C-LEASING 1013.3         

The Consumer Leasing Act (15 U.S.C. §§ 1667-1667f), as implemented by Regulation M, 12 C.F.R. § 1013.3, requires a lessor to make the disclosures required by § 1013.4, as applicable.  The disclosures should be clear and conspicuous, in writing, and in a form the consumer may keep.  The disclosures should also meet the requirements outlined in § 1013.3(a) through (d) regarding form, segregation, timing, language of disclosures, multiple lessors or lessees, and use of estimates.

C-LEASING 1013.4         

The Consumer Leasing Act (15 U.S.C. §§ 1667-1667f), as implemented by Regulation M, 12 C.F.R. § 1013.4, requires the lessor to disclose the specific information outlined in § 1013.4(a) through (t), as applicable.

C-LEASING 1013.5         

The Consumer Leasing Act (15 U.S.C. §§ 1667-1667f), as implemented by Regulation M, 12 C.F.R. § 1013.5, requires a lessor to provide new disclosures when a consumer lease is renegotiated, or extended for more than six months, except as permitted by § 1013.5(d).

C-LEASING 1013.7(b)    

The Consumer Leasing Act (15 U.S.C. §§ 1667-1667f), as implemented by Regulation M, 12 C.F.R. § 1013.7(b), requires a financial institution to make clear and conspicuous advertising disclosures.  If an advertisement states any of the triggering terms in § 1013.7(d)(1) then the advertisement must contain the additional disclosures prescribed by § 1013.7(d)(2), with an exception for merchandise tags in § 1013.7(e).  In addition, if the financial institution advertises through television or radio and states any of the triggering terms in § 1013.7(d)(1), the financial institution must meet the requirements of § 1013.7(f).

C-LEASING 1013.8         

The Consumer Leasing Act (15 U.S.C. §§ 1667-1667f), as implemented by Regulation M, 12 C.F.R. § 1013.8, requires a financial institution to retain evidence of compliance with Regulation M, other than the advertising requirements under § 1013.7, for a period of not less than two years after the date the disclosures are required to be made or an action is required to be taken.

Controlling the Assault of Non-Solicited Pornography and Marketing Act

CAN-SPAM 4(a)(1)          

Section 4(a)(1) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (18 U.S.C. § 1037(a)(1)-(5)), prohibits anyone who, in or affecting interstate or foreign commerce, knowingly:

(1) accesses a protected computer without authorization, and intentionally initiates the transmission of multiple commercial electronic mail messages from or through such computer;

(2) uses a protected computer to relay or retransmit multiple commercial electronic mail messages, with the intent to deceive or mislead recipients, or any Internet access service, as to the origin of such messages;

(3) materially falsifies header information in multiple commercial electronic mail messages and intentionally initiates the transmission of such messages;

(4) registers, using information that materially falsifies the identity of the actual registrant, for five or more electronic mail accounts or online user accounts or two or more domain names, and intentionally initiates the transmission of multiple commercial electronic mail messages from any combination of such accounts or domain names; or

(5) falsely represents oneself to be the registrant or the legitimate successor in interest to the registrant of 5 or more Internet Protocol addresses, and intentionally initiates the transmission of multiple commercial electronic mail messages from such addresses, or conspires to do so. Note, such person shall be punished as provided in Section 4(b) of this Act.

CAN-SPAM 5(a)

Section 5(a) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (15 U.S.C. § 7704(a)), prohibits a person from using false or misleading transmission information; using deceptive subject headings; initiating e-mail messages that do not contain a functioning e-mail return address or comparable mechanism; continuing to initiate commercial e-mail messages after receipt of a request not to receive such messages; and initiating a commercial e-mail message unless the message provides clear and conspicuous identification that the message is an advertisement or solicitation, a notice of the opportunity to decline further messages, and a physical address of the sender.

CAN-SPAM 5(b)

Section 5(b) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (15 U.S.C. § 7704(b)), prohibits a person from obtaining e-mail addresses, by using an automated means, from an Internet Web site or proprietary online service operated by another person; obtaining e-mail addresses, by using an automated means, that generates possible e-mail addresses; using automated means to register for multiple e-mail accounts or online user accounts from which to transmit a commercial e-mail message; and relaying or retransmitting a commercial e-mail message that is unlawful from a computer or computer network without authorization.

CAN-SPAM 5(d)

Section 5(d) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (15 U.S.C. § 7704(d)), requires a person to place the marks or notices, as set forth in the Federal Trade Commission’s regulation at 16 C.F.R. § 316.4, in the subject heading and the matter of the message that is initially viewable to the recipient, on commercial e-mail messages containing sexually oriented material, unless the recipient has given prior affirmative consent to receipt of the message as set forth in § (5)(d)(2) of this Act.   

CAN-SPAM 6(a)

Section 6(a) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (15 U.S.C. § 7705(a)), prohibits a person from promoting, or allowing the promotion of, that person’s trade or business, or goods, products, property, or services in a commercial e-mail message in violation of § 5(a)(1) of this Act under the circumstances set forth in § 6(a)(1) through (a)(3) of this Act.

Electronic Fund Transfers Act/Regulation E – Subpart A – General

EFTA-A (no subsection)

Section 914 of the Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.) prohibits financial institutions from entering into any writing or other agreement containing any provisions which constitute a waiver of any consumer right conferred or cause of action created under the Electronic Fund Transfers Act.

EFTA-A 1005.4

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.4, requires a financial institution to provide clear and readily understandable disclosures, in writing, and in a form the consumer may keep, except as permitted under part 1005.

EFTA-A 1005.5

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.5, requires a financial institution to only issue an access device to consumers in response to an oral or written request, or as a renewal or substitution of an accepted access device previously issued, except as permitted under § 1005.5(b).

EFTA-A 1005.6

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.6, requires a financial institution to only hold a consumer liable for unauthorized electronic fund transfers if the disclosures under § 1005.7(b)(1), (b)(2), and (b)(3) have been provided.  In addition, financial institutions are prohibited from imposing liability on consumers outside of the prescribed limitations and amounts set out in § 1005.6(b).

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.7, requires a financial institution to provide the disclosures at the time a consumer contracts for an electronic fund transfer service or before the first electronic fund transfer involving the consumer’s account.  The financial institution must also disclose the content required under § 1005.7(b)(1) through (b)(11), as applicable.  Finally, § 1005.7(c) requires a financial institution to provide new disclosures if an electronic fund transfer service is added to a consumer’s account having different terms and conditions than those described in the initial disclosures.

EFTA-A 1005.8(a)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.8(a), requires a financial institution, except as permitted in § 1005.8(a)(2), to mail or deliver a written notice to the consumer at least 21 days before the effective date of any change in a term or condition required to be disclosed under § 1005.7(b) if the change would result in increased fees, increased liability, fewer types of available electronic fund transfers, or stricter limitations on the frequency or dollar amount of transfers.

EFTA-A 1005.8(b)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.8(b), requires a financial institution to mail or deliver to the consumer an error resolution notice meeting the requirement of § 1005.8(b) at least once each calendar year or, alternatively, on or with each periodic statement required by § 1005.9(b).

EFTA-A 1005.9(a)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.9(a), requires a financial institution to make a receipt available to the consumer at the time an electronic fund transfer is initiated at an electronic terminal, except for small-value transfers permitted in § 1005.9(e).  The receipt shall set forth the following: the amount of the transfer; date; type of transfer; an identifier for the consumer’s account or access device; the location of the terminal where the transfer was initiated; and the name of any third party to/from whom funds are transferred, as applicable.

EFTA-A 1005.9(b)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.9(b), requires a financial institution to send a periodic statement for each monthly cycle in which an electronic fund transfer has occurred, or at least quarterly if no transfer has occurred.  The periodic statement must include the following, as applicable: transaction information, the account number, the amount of any fees, the account balances, an address and telephone number for inquiries or notice of errors, and a telephone number for preauthorized transfers.  For prepaid accounts, a financial institution must also disclose in the periodic statement the amount of any fees assessed against the prepaid account, whether for electronic funds transfers or otherwise, as required by § 1005.18(c)(4) and must display a summary total of all fees assessed for the prior calendar month and for the calendar year to date, as required by § 1005.18(c)(5).

For prepaid accounts, an institution may opt not to send a periodic statement, provided the institution makes available to the consumer account history information in the manner provided under § 1005.18(c)(1) or (c)(2) and the account history includes the information set forth in § 1005.18(c)(3) through (c)(5).  If an account history is not made available to the consumer in the manner provided under § 1005.18(c)(1) or (c)(2), the institution must send the consumer the periodic statement with the information set forth under §§ 1005.9(b), 1005.18(c)(4), and 1005.18(c)(5).

EFTA-A 1005.9(c)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.9(c), requires a financial institution to provide a periodic statement for passbook accounts if it does not update the passbook upon presentation or enter on a separate document the amount and date of each electronic fund transfer since the passbook was last presented.  For accounts other than passbook accounts, a financial institution is required to send a periodic statement at least quarterly.

EFTA-A 1005.10(a)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.10(a), requires a financial institution to provide an oral or written notice or a readily available telephone line to the consumer when a preauthorized electronic fund transfer is initiated to the consumer’s account at least once every 60 days.  The notice must be given within two business days after the transaction has occurred.  The telephone number must be included in the initial disclosure and on each periodic statement.  In addition, a financial institution shall credit the consumer’s account for the transfer as of the date the funds are received.

EFTA-A 1005.10(b)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.10(b), requires that preauthorized electronic fund transfers from a consumer’s account be authorized only in writing, signed or authenticated by the consumer with a copy provided to the consumer.

EFTA-A 1005.10(c)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.10(c), requires a financial institution to stop the payment of a preauthorized electronic fund transfer from a consumer’s account when notified by the consumer in accordance with the requirements of § 1005.10(c)(1) and (c)(2).

EFTA-A 1005.10(d)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.10(d), requires a financial institution or designated payee to send the consumer a written notice of the amount and date of the preauthorized electronic fund transfer from a consumer’s account at least 10 days before the scheduled transfer date when the transfer will vary in amount from the previous transfer under the same authorization or from the preauthorized amount.

EFTA-A 1005.10(e)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.10(e), prohibits a financial institution from conditioning an extension of credit to a consumer on the consumer’s repayment by preauthorized electronic fund transfers, except for the conditions noted under § 1005.10(e)(1).  In addition, a financial institution is prohibited from requiring a consumer to establish an account for the receipt of electronic fund transfers with a particular institution as a condition of employment or receipt of a government benefit.

EFTA-A 1005.11(c)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.11(c), requires a financial institution to investigate, determine whether an error occurred, report the results to the consumer, and correct the error within the timeframes provided under this subsection (c).

EFTA-A 1005.11(d)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.11(d), requires a financial institution, when it determines that no error occurred or that an error occurred in a manner or amount different than described by the consumer, to provide a written explanation of its findings and notify the consumer upon debiting the provisionally credited amount, as prescribed under § 1005.11(d)(1) and (d)(2).

EFTA-A 1005.13(b)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.13(b), requires that a financial institution retain evidence of compliance with the requirements of the Act for a period of not less than two years from the date disclosures are required to be made or action is required to be taken.  In addition, any financial institution having actual notice that it is the subject of an investigation or an enforcement proceeding by its enforcement agency regarding the Act shall retain the records until final disposition of the matter.

EFTA-A 1005.16

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.16, requires that an automated teller machine operator may only impose a fee on a consumer for initiating an electronic fund transfer or balance inquiry if a notice is provided that a fee will be imposed for initiating an electronic fund transfer or a balance inquiry and the requirements under § 1005.16(c) and (d) are met.

EFTA-A 1005.17(b)(1)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.17(b)(1), prohibits a financial institution holding a consumer’s account from assessing a fee or charge on a consumer’s account for paying an ATM or one-time debit card transaction under the institution’s overdraft service unless the financial institution: provides the consumer with a written notice (or if the consumer agrees, electronically) that is segregated from other information and describes the institution’s overdraft service; provides the consumer a reasonable opportunity to affirmatively consent or opt-in; obtains the consumer’s affirmative consent or opt-in; and provides the consumer with a confirmation of the consumer’s consent in writing (or if the consumer agrees, electronically) informing the consumer of the right to revoke such consent.

EFTA-A 1005.17(b)(2)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.17(b)(2), prohibits a financial institution from conditioning the payment of any overdraft for checks, ACH transactions, and other types of transactions on the consumer affirmatively consenting to the institution’s payment of ATM and one-time debit card transactions; or declining to pay checks, ACH transactions, and other types of transactions that overdraw the consumer’s account because the consumer has not affirmatively consented to the institution’s overdraft service for ATM and one-time debit card transactions.

EFTA-A 1005.17(b)(3)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.17(b)(3), requires a financial institution to provide the same account terms, conditions, and features to consumers who do not affirmatively consent to the institution’s overdraft service for ATM and one-time debit card transactions as those offered to consumers who affirmatively consent.

EFTA-A 1005.17(d)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.17(d), requires a financial institution to provide a notice substantially similar to Model Form A-9 including the following items, as applicable: a brief description of the financial institution’s overdraft service; the dollar amount of any fees or charges assessed for paying an ATM or one-time debit card transaction; the maximum number of overdraft fees or charges that may be assessed; an explanation of the consumer’s right to affirmatively consent to the payment of overdrafts for ATM and one-time debit card transactions; any alternative plans for covering overdrafts mentioned in § 1005.17(d)(5).

EFTA-A 1005.17(f)          

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.17(f), requires a financial institution to accept a consumer’s revocation of consent as soon as reasonably practicable.

EFTA-A 1005.17(g)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.17(g), requires a financial institution to consider a consumer’s opt-in or affirmative consent effective until revoked by the consumer or the financial institution terminates the overdraft service.

EFTA-A 1005.18(b)(1)      

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(1), requires a financial institution to provide disclosures required under § 1005.18(b) before a consumer acquires a prepaid account, except as permitted for prepaid accounts acquired in retail locations and orally by telephone, provided that the financial institution complies with the conditions in § 1005.18(b)(1)(ii) or (b)(1)(iii).

EFTA-A 1005.18(b)(2);(b)(5)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(2), requires a financial institution to provide a short form disclosure setting forth the fees and information listed in § 1005.18(b)(2)(i) through (b)(2)(xiv) for a prepaid account, as applicable.  Additionally, a financial institution providing a short form disclosure must also disclose additional information as prescribed by § 1005.18(b)(5).

EFTA-A 1005.18(b)(3)     

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(3), requires a financial institution to make additional short form disclosures of variable and third-party fees, when the amount disclosed pursuant to § 1005.18(b)(2)(i) through (b)(2)(vii) and (b)(2)(ix) of this section could vary.  A financial institution is also prohibited from disclosing any finance charges as described in Regulation Z, 12 C.F.R. § 1026.4(b)(11), imposed in connection with a separate credit feature accessible by a hybrid prepaid-credit card as defined in Regulation Z, 12 C.F.R. § 1026.61.

EFTA-A 1005.18(b)(4)     

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(4), requires a financial institution to provide a long form disclosure setting forth the fees and information listed in § 1005.18(b)(4)(i) through (b)(4)(vii) for a prepaid account, as applicable.

EFTA-A 1005.18(b)(6)    

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(6), requires a financial institution to provide written disclosures in a form the consumer may keep and in a tabular format, except as expressly permitted under this subsection.

EFTA-A 1005.18(b)(7)      

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(7), requires a financial institution to follow specific formatting requirements regarding the grouping, ordering and segregation of information, as well as the prominence and size of the disclosures, as set out in § 1005.18(b)(7)(i) through (b)(7)(iii).

EFTA-A 1005.18(b)(8)     

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(8), requires that fee names and other terms be used consistently across the disclosures.

EFTA-A 1005.18(b)(9)      

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(b)(9), requires a financial institution to provide pre-acquisition disclosures in a foreign language under circumstances outlined in § 1005.18(b)(9)(i), and provide the long form disclosures in English upon request, as required by § 1005.18(b)(9)(ii).

EFTA-A 1005.18(c)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(c), states that if a financial institution provides a periodic statement under § 1005.9(b) or the periodic statement alternative under § 1005.18(c)(1), the institution must disclose any fees assessed against the prepaid account and a summary total of all such fees in accordance with the requirements of § 1005.18(c)(4) and (c)(5).

EFTA-A 1005.18(d)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(d), requires a financial institution that has provided information under § 1005.18(c)(1) to modify the initial disclosure provided under § 1005.7(b) for prepaid accounts by disclosing account access information and a notice concerning error resolution, as permitted by § 1005.18(d)(1).  The financial institution must also provide an annual notice concerning error resolution, as permitted by § 1005.8(d)(2).

EFTA-A 1005.18(e)(1)     

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(e)(1), requires a financial institution that has provided information under § 1005.18(c)(1) to comply with the error resolution requirements of § 1005.6(b)(3), except that the 60-day period for reporting unauthorized transfers begins on the earlier of: (i) the date the consumer electronically accesses the account provided the account transaction history reflects the unauthorized transfer; or (ii) the date the financial institution sends the consumer a written history of account transactions in which the unauthorized transfers is first reflected.

EFTA-A 1005.18(e)(2)    

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(e)(2), requires a financial institution that has provided information under § 1005.18(c)(1) to comply with the requirements of § 1005.11 in response to an oral or written notice of an error from the consumer that is received by the earlier of the following: (i) 60 days after the date the consumer electronically accesses the account provided the account transaction history reflects the unauthorized transfer; or (ii) 60 days after the date the financial institution sends the consumer a written history of account transactions in which the unauthorized transfers is first reflected.  A financial institution complies with § 1005.18(e)(2)(i) if it investigates any oral or written error notices from the consumer received within 120 days after the transfer was credited or debited to the consumer’s account.

EFTA-A 1005.18(f)(1)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(f)(1), requires a financial institution to include as part of the initial disclosure required in § 1005.7, all of the information required in its long form disclosure pursuant to § 1005.18(b)(4).

EFTA-A 1005.18(f)(3)     

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(f)(3) requires a financial institution to disclose on the prepaid account device the name of the financial institution, the Web site URL, and a telephone number a consumer can use to contact the financial institution about the prepaid account.

EFTA-A 1005.18(g)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.18(g), requires a financial institution to provide the same account terms, conditions, and features for prepaid accounts with a covered separate credit feature accessible by a hybrid pre-paid card (defined by Regulation Z, 12 C.F.R. § 1026.61), as it provides for prepaid accounts without such a credit feature, except as provided in § 1005.18(g)(2).

EFTA-A 1005.19(b)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.19(b), requires a financial institution to make submissions of prepaid account agreements to the Consumer Financial Protection Bureau within 30 days after offering, amending, or ceasing to offer any prepaid account agreement containing information prescribed in § 1005.19(b)(1)(i) through (b)(1)(iv), and to meet the applicable requirements of § 1005.19(b)(2) and (b)(3) regarding amended or withdrawn agreements.  There is no violation if the financial institution falls under the de minimis or product testing exceptions set out in § 1005.19(b)(4) and (b)(5), respectively.

EFTA-A 1005.19(c)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.19(c), requires an issuer to post and maintain prepaid account agreements offered to the public on its publicly available Web site.  Posted agreements must conform to the form and content requirements of § 1005.19(b)(6), be in a prominent and readily accessible public location, and accessible without submitting personally identifiable information.  The agreements must be updated as frequently as is required for submission to the Consumer Financial Protection Bureau under § 1005.19(b)(2).

EFTA-A 1005.19(d)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.19(d), requires an issuer to make agreements for all open prepaid accounts available, as required by § 1005.19(d)(1)(i) and (d)(1)(ii), under the form and content requirements of § 1005.19(d)(2).

EFTA-A 1005.19(f)          

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.19(f), requires an issuer to submit to the Consumer Financial Protection Bureau no later than May 1, 2019 all prepaid account agreements it offers as of April 1, 2019.

EFTA-A 1005.20(c)(1)-(2)              

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.20(c)(1) and (c)(2), requires a financial institution to provide disclosures under § 1005.20 for gift cards and gift certificates that are clear and conspicuous, in writing or electronically, and in a retainable form, except disclosures required prior to purchase and disclosures on in-store signage, messages during customer service calls, Web sites, and general advertising may be given orally.

EFTA-A 1005.20(c)(3)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.20(c)(3), requires a financial institution to disclose to the consumer the information required by § 1005.20(d)(2), (e)(3), and (f)(1) prior to purchase of the gift certificate, store gift card, or general-use prepaid card.  The fees, and the terms and conditions of expiration, required to be disclosed prior to purchase, cannot be changed after purchase.

EFTA-A 1005.20(c)(4)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.20(c)(4), requires a financial institution to disclose to the consumer the information required by § 1005.20(a)(4)(iii), (d)(2), (e)(3), and (f)(2) on the gift certificate or gift card or in the case of a loyalty, award, or promotional gift card, on the card, code, or other device.

EFTA-A 1005.20(d);(e)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.20(d) and (e), prohibits the imposition of a dormancy, inactivity, or service fee on a gift certificate, store gift card, or general-use prepaid card except under the conditions in § 1005.20(d)(1) through (d)(3), and prohibits the sale or issuance of a gift certificate, store gift card, or general-use prepaid card with an expiration date unless the conditions in § 1005.20(e)(1) through (e)(4) are met.

EFTA-A 1005.20(f)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.20(f), requires a financial institution to provide the following disclosures in connection with a gift certificate, store gift card, or general-use prepaid card, as applicable: the type and amount of fee, and conditions under which the fee may be imposed on or with the certificate or card; and a toll-free telephone number and Web site, if maintained, that the consumer can use to obtain information about fees described in § 1005.20(d)(2) and (f)(1) that must be disclosed on the certificate or card.

Electronic Fund Transfers Act/Regulation E – Subpart B – Requirements for Remittance Transfers

EFTA-B 1005.31(a)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.31(a), requires a financial institution to provide clear and conspicuous disclosures that are retainable. Disclosures may be provided in writing, electronically, or orally pursuant to the conditions in § 1005.31(a)(2) through (a)(4).  Electronic and oral disclosures for mobile application or text message transactions may be provided pursuant to the conditions in § 1005.31(a)(5) and need not be retainable.

EFTA-B 1005.31(b)-(c)   

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.31(b), requires a financial institution to provide a pre-payment disclosure, receipt or a single combined disclosure (as an alternative to the pre-payment disclosure and receipt), and the long form error resolution and cancellation notice that satisfy applicable content requirements contained in § 1005.31(b)(1) through (b)(4). The disclosures must meet the specific format requirements under § 1005.31(c)(1) through (c)(4), as applicable, regarding grouping, proximity, prominence and size, and segregation.

EFTA-B 1005.31(d)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.31(d), requires a financial institution to describe estimated disclosures with the term “estimated” or a substantially similar term in close proximity to the estimated term or terms, to the extent the use of an estimated term or amount is permitted by § 1005.32.

EFTA-B 1005.31(e)          

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.31(e), requires that the pre-payment disclosure and receipt, or a combined disclosure, be provided to the sender within the timing requirements prescribed under § 1005.31(e)(1) and (e)(2), except as permitted under § 1005.36(a) for transfers scheduled before the date of a transfer.

EFTA-B 1005.31(f)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.31(f), requires that disclosures be accurate when a sender makes a payment for the remittance transfer, except to the extent estimates are permitted by § 1005.32 or the transfer is scheduled before the date of a transfer in accordance with the requirements of § 1005.36.

EFTA-B 1005.31(g)           

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.31(g), requires that the disclosures be made in English and, if applicable, either in the foreign languages used by the remittance transfer provider to advertise the transfer services or the foreign language used by the remittance transfer sender to conduct the transaction, as prescribed by § 1005.31(g)(1)(i) and (g)(1)(ii).  Oral, mobile application, or text message disclosures must meet requirements of § 1005.31(g)(2).

EFTA-B 1005.32(a)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.32(a), prohibits a financial institution from using estimates for the amounts required in § 1005.31(b)(1)(iv) through (b)(1)(vii) to be disclosed under § 1005.31(b)(1) through (b)(3) and § 1005.36(a)(1) and (a)(2) unless the institution cannot determine the exact amounts for reasons beyond its control; it is an insured institution; and the transfer is sent from the sender’s account with the institution. This subsection expires on July 21, 2020.

EFTA-B 1005.32(b)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.32(b), prohibits financial institutions from using estimates for transfers to certain countries, transfers scheduled before the date of the transfer, and disclosures of non-covered third-party fees and taxes collected by a person other than the provider, for the amounts required to be disclosed under § 1005.31(b)(1)(iv) through (b)(1)(vii), unless the conditions for applicable permanent exceptions under § 1005.32(b)(1) through (b)(3) are met.

EFTA-B 1005.32(c)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.32(c), requires that the use of estimates in remittance disclosures by insured institutions must be based on a specific approach or approaches regarding the exchange rate, the transfer amount in the currency in which the funds will be received, covered third-party fees, and the amount of currency that will be received by the designated recipient, except as otherwise permitted by § 1005.32(c).

EFTA-B 1005.32(d)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.32(d), requires a financial institution to use estimates for transfers scheduled before the date of transfer that are based on the exchange rate, or where applicable, the estimated exchange rate, using the estimation methodologies under § 1005.32(c)(1), or the estimation methodology that the provider would be permitted to use in providing disclosures to a sender requesting such a remittance transfer to be made on the same day.

EFTA-B 1005.33(b)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.33(b), requires a financial institution to meet the timing and content requirements with respect to any oral or written notice of error that is received no later than 180 days after the date of availability of the remittance transfer, enables the provider to identify the sender’s and recipient’s contact information, and the remittance transfer to which the notice of error applies, and indicates why the sender believes an error exists, as prescribed by § 1005.33(b)(1)(i) through (b)(1)(iii).  When a notice of error is based on documentation, additional information, or clarification that the sender previously requested, the sender’s notice of error is timely if received within the prescribed timeframes required by § 1005.33(b)(2).

EFTA-B 1005.33(c)-(d)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.33(c), requires a financial institution to investigate promptly and determine whether an error occurred, report the results to the sender, correct the error and provide the appropriate remedy within the prescribed timeframes provided by § 1005.33(c). If the financial institution determines that no error occurred or a different error occurred, it must provide an explanation of the results of the investigation and the copies of the documents on which it relied in making its error determination, as required by § 1005.33(d)(1) and (d)(2).

EFTA-B 1005.33(g)          

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.33(g), requires a financial institution to develop and maintain written policies and procedures to ensure compliance with error resolution requirements applicable to remittance transfers and the retention of documentation related to error investigations. Such error resolution documentation retention policies and procedures must conform to the minimum requirements of § 1005.33(g)(2).

EFTA-B 1005.34

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.34, requires a financial institution to follow procedures for oral or written requests to cancel a remittance transfer, as prescribed by § 1005.34(a)(1) and (a)(2), except as provided in § 1005.36(c) regarding cancellation of transfers scheduled before the date of the transfer.  The financial institution must also comply with the requirements of § 1005.34(b) regarding time limits and amount of refunds.

EFTA-B 1005.36(a)-(b)

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.36, requires a financial institution to provide timely, accurate (except to the extent estimates are permitted by § 1005.32), and updated disclosures and receipts, as required by § 1005.36(a) and (b), for a one-time transfer scheduled five or more business days before the date of transfer, or for the first in a series of preauthorized remittance transfers and each subsequent preauthorized transfer.

EFTA-B 1005.36(c)          

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.36(c), requires a financial institution to comply with any oral or written request to cancel any remittance transfer scheduled by the sender at least three business days before the date of the transfer, provided that the request enables the provider to identify the sender’s contact information, the particular transfer to be cancelled, and is received within the timeframe prescribed by § 1005.36(c)(2).

EFTA-B 1005.36(d)         

The Electronic Fund Transfers Act (15 U.S.C. § 1693 et seq.), as implemented by Regulation E, 12 C.F.R. § 1005.36(d), requires a financial institution to provide the additional disclosures for any subsequent transfers in a series of preauthorized remittance transfers required by § 1005.36(d)(1)(i) and (d)(1)(ii).  The financial institution must also meet the applicable timing, notice, format, and accuracy requirements prescribed by § 1005.36(d)(2) through (d)(4).

Electronic Signatures Act

E-SIGN 101(c)(1)(A)-(C) 

Section § 101(c)(1)(A) through (C) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001), allows a financial institution to use an electronic record to satisfy any statute, regulation, or rule of law requiring that such information be provided in writing, provided the following conditions are met:

(A) the consumer has affirmatively consented and has not withdrawn such consent;

(B) the consumer, prior to consenting, is provided with a clear and conspicuous statement informing the consumer of the following: their right to have the record provided in paper or nonelectronic form and to withdraw consent to have the record provided electronically along with any conditions, consequences or fees of such withdrawal; whether the consent applies to a particular transaction or categories of records; the procedures the consumer must use to withdraw consent and to update information needed to contact the consumer electronically; and how the consumer can obtain a paper copy of an electronic record and whether there are any fees; and

(C) prior to consenting, the consumer is provided a statement of the hardware and software requirements for accessing and retaining electronic records; and the consumer confirms their consent electronically in a manner that reasonably demonstrates that the consumer can access information in the electronic form used to provide the information that is the subject of the consumer’s consent.

E-SIGN 101(c)(1)(D)        

Section § 101(c)(1)(D) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001), requires that, after a consumer consents in accordance with § 101(c)(1)(A) and if a financial institution changes hardware and software needed to access or retain electronic records that create a material risk that the consumer will not be able to access or retain a subsequent electronic record that was the subject of the consent, the financial institution provide the consumer with a statement of the revised hardware and software requirements for accessing and retaining electronic records and of the consumer’s right to withdraw consent without the imposition of any fee, condition or consequence that was not disclosed under § 101(c)(1)(B)(i). The financial institution must again also comply with the requirements of § 101(c)(1)(C).

E-SIGN 101(d)    

Section 101(d) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001), requires a financial institution to maintain electronic records that accurately reflect the information set forth in the contract or other records and that remain accessible to all persons who are entitled to access by statute, regulation, or rule of law for the period required by such statute, regulation, or rule of law, in a form that is capable of being accurately reproduced for later reference, unless the exception in § 101(d)(2) applies.

Equal Credit Opportunity Act

ECOA 1002.4(a)-(b) AGE

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(a) and (b), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction on the basis of age, providing that the applicant has the capacity to enter into a binding contract.

ECOA 1002.4(a)-(b) CCPA             

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(a) and (b), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction on the basis of the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act or any state law upon which an exemption has been granted by the Consumer Financial Protection Bureau.

ECOA 1002.4(a)-(b) MARITAL-STATUS

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(a) and (b), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction on the basis of marital status.

ECOA 1002.4(a)-(b) PUBLIC-ASSIST

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(a) and (b), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction on the basis of the fact that all or part of the applicant’s income derives from any public assistance program.

ECOA 1002.4(a)-(b); 6(b)(9) COLOR

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. §§ 1002.4(a), (b), and 1002.6(b)(9), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction on the basis of color, or except as otherwise provided by law, considering color in any aspect of a credit transaction.

ECOA 1002.4(a)-(b); 6(b)(9) N-ORIG

The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(a), § 1002.4(b), and § 1002.6(b)(9), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction based on national origin, or except as otherwise provided by law, considering national origin in any aspect of a credit transaction.

ECOA 1002.4(a)-(b); 6(b)(9) RACE

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. §§ 1002.4(a), (b), and 1002.6(b)(9), prohibits a creditor from discriminating against, or discouraging an applicant in any aspect of a credit transaction on the basis of race or, except as otherwise provided by law, considering race in any aspect of a credit transaction

ECOA 1002.4(a)-(b); 6(b)(9) REL

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. §§ 1002.4(a), (b), and 1002.6(b)(9), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction on the basis of religion, or except as otherwise provided by law, considering religion in any aspect of a credit transaction.

ECOA 1002.4(a)-(b); 6(b)(9) SEX

The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(a), § 1002.4(b), and § 1002.6(b)(9), prohibits a creditor from discriminating against or discouraging an applicant in any aspect of a credit transaction based on sex, or except as otherwise provided by law, considering sex in any aspect of a credit transaction.

ECOA 1002.4(c)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(c), requires the creditor to take a written application for dwelling-related types of credit covered by § 1002.13(a).

ECOA 1002.4(d)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(d), requires a creditor to provide written disclosures or other information required by this part, in a clear and conspicuous manner and, except for the disclosures required by §§ 1002.5 and 1002.13, in a form the applicant may retain.  The written disclosures required by this part may be provided to the applicant 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.).

ECOA 1002.4(e)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.4(e), requires a creditor that provides disclosures in languages other than English, to make the disclosures available in English upon request.

ECOA 1002.5(a)(2)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.5(a)(2), requires a creditor to collect information for monitoring purposes as required by § 1002.13 for credit secured by the applicant's dwelling.

ECOA 1002.5(b)-(d)         

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.5(b) through (d) prohibits a creditor from:

(1) inquiring about the race, color, religion, national origin, or sex of an applicant or any other person in connection with a credit transaction, except as permitted in §§ 1002.5(b)(1) and (b)(2), or 1002.8 in the case of a special purpose credit program;

(2) requesting any information concerning an applicant’s spouse or former spouse, except as permitted in § 1002.5(c)(2);

(3) requesting the marital status of a person applying for individual, unsecured credit, except as permitted in § 1002.5(d)(1) (for credit other than individual, unsecured, a creditor may inquire about the applicant’s marital status, but must only use the terms "married," "unmarried," and "separated");

(4) inquiring as to whether income stated in an application is derived from alimony, child support, or separate maintenance payments, except as permitted in § 1002.5(d)(2); or

(5) requesting information about birth control practices, intentions concerning the bearing or rearing of children, or capability to bear children, except as permitted in § 1002.5(d)(3).

ECOA 1002.6(b)(1)-(4)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.6(b)(1) through (b)(4), prohibits a creditor from:

(1) using a prohibited basis in any system of evaluating the creditworthiness of applicants, except as permitted by the Act and part 1002;

(2) taking into account an applicant’s age (provided the applicant has the capacity to enter into a binding contract), or whether an applicant’s income derives from any public assistance program, except as permitted by § 1002.6(b)(2)(ii) through (b)(2)(iv);

(3) making assumptions or using aggregate statistics relating to the likelihood that any category of persons will bear or rear children or will, for that reason, receive diminished or interrupted income in the future, when evaluating an applicant’s creditworthiness; or

(4) taking into account whether there is a telephone listing in the name of an applicant for consumer credit when evaluating the applicant’s creditworthiness.

ECOA 1002.6(b)(5)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.6(b)(5), prohibits a creditor from discounting or excluding income of an applicant or the spouse of the applicant because of a prohibited basis or because the income is derived from part-time employment, or from an annuity, pension, or other retirement benefit, and requires the creditor to consider alimony, child support or separate maintenance payments as income to the extent they are likely to be consistently made.

ECOA 1002.6(b)(6)          

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.6(b)(6), requires a creditor that considers credit history when evaluating the creditworthiness of similarly qualified applicants for a similar type and amount of credit, to consider the credit history of accounts that the applicant and spouse are permitted to use or for which both are contractually liable, and to consider information presented by the applicant that tends to indicate the credit history being considered does not accurately reflect the applicant's creditworthiness.  This section further requires the creditor to consider the credit history of any account reported in the name of the applicant's spouse or former spouse that the applicant can demonstrate accurately reflects the applicant's creditworthiness.

ECOA 1002.6(b)(8)          

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.6(b)(8), requires a creditor to evaluate married and unmarried applicants by the same standards.  This section also prohibits a creditor from treating applicants differently based on the existence, absence, or likelihood of a marital relationship between the parties, when evaluating joint applications.

ECOA 1002.7(c)(1)          

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.7(c)(1), prohibits a creditor, with regards to an existing open-end account, from requiring reapplication except as provided in § 1002.7(c)(2), changing the terms of the account, or terminating the account on the basis of the applicant reaching a certain age or retiring, or on the basis of a change in the applicant’s name or marital status, unless there is evidence of the applicant’s inability or unwillingness to repay.

ECOA 1002.7(d)(1); (d)(5)-(6)        

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.7(d)(1), (d)(5), and (d)(6), prohibits a creditor from:

(1) requiring the signature of an applicant's spouse or other person (other than a joint applicant) on any credit instrument, if the applicant qualifies under the creditor's standards of creditworthiness for the amount and terms of the credit requested;

(2) deeming the submission of a joint financial statement or other evidence of jointly held assets as an application for joint credit; requiring the applicant’s spouse be the additional party (cosigner, guarantor, endorser, or similar party), when the personal liability of an additional party is necessary to support the extension of credit requested by the applicant; and

(3) imposing requirements upon an additional party that the creditor is prohibited from imposing upon an applicant under this section.

ECOA 1002.7(d)(2)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.7(d)(2), states that, if an applicant requests unsecured credit and relies in part upon property that the applicant owns jointly with another person to satisfy a creditor’s standards of creditworthiness, a creditor may require the signature of the joint owner of property only on the instrument(s) necessary, or reasonably believed to be necessary, under the law of the state in which the property is located, to enable the creditor to reach the property being relied upon in the event of the death or default of the applicant.

ECOA 1002.7(e)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.7(e), prohibits a creditor from refusing to extend credit or terminating an account because credit life, health, accident, disability, or other credit-related insurance is not available on the basis of the applicant's age.

ECOA 1002.9(a)(1)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. §1002.9(a)(1), requires a creditor to notify an applicant of action taken on a credit application within prescribed time limits.

ECOA 1002.9(a)(2); (b)(2)              

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.9(a)(2) and (b)(2), requires a creditor to provide an applicant against whom adverse action is taken, a written notice that contains a statement of the action taken; the name and address of the creditor; a statement of the provisions of section 701(a) of the Act; the name and address of the Federal agency that administers compliance with respect to the creditor; and either a statement of specific reasons for the action taken, or a disclosure of the applicant’s right to a statement of specific reasons within 30 days, if the statement is requested within 60 days of the creditor’s notification, along with the name, address, and telephone number of the person or office where the statement of reasons may be obtained.  The statement of reasons for adverse action required by this section, must be specific and indicate the principal reason(s) for adverse action.

ECOA 1002.9(a)(3)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.9(a)(3), requires a creditor to notify business credit applicants of action taken on a credit application and sets out the notification requirements for businesses with gross revenues of $1 million or less (in the preceding fiscal year) and businesses with gross revenues in excess of $1 million (in the preceding fiscal year).

ECOA 1002.9(c)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.9(c), requires a creditor, within 30 days of receipt of an incomplete application, to either notify an applicant of action taken in accordance with § 1002.9(a) or request the information necessary to complete the application, designating a reasonable period of time for the applicant to provide the information, and informing the applicant that failure to provide the information requested will result in no further consideration.

ECOA 1002.9(g)

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.9(g), requires each creditor taking adverse action to comply with this section, directly or through a third party, when an application is made on behalf of an applicant to more than one creditor and no credit is offered, or if the applicant does not expressly accept or use any credit offered.  A notice given by a third party shall disclose the identification of each creditor on whose behalf the adverse action notice is given.

ECOA 1002.10(a)-(b)      

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.10(a) and (b), requires the creditor to designate new accounts to reflect the participation of both spouses, if the applicant's spouse is permitted to use or is contractually liable on the account (other than as a guarantor, surety, endorser, or similar party).  In addition, creditors are required to designate existing accounts to reflect participation by both spouses, within 90 days after receiving a written request to do so from one of the spouses. Further, this section requires a creditor that furnishes credit information to a consumer reporting agency on accounts designated to reflect the participation of both spouses, to furnish the credit information in a manner that will enable the consumer reporting agency to provide access to the information in the name of either participating spouse.

ECOA 1002.10(c)             

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.10(c), requires that if, in response to an inquiry, a creditor furnishes credit information on an account designated to reflect participation of both spouses, the creditor shall furnish the information in the name of the spouse about whom the information is requested.

ECOA 1002.11(c)             

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.11(c), prohibits a creditor from aggregating or otherwise combining accounts for the purpose of determining permissible finance charges or loan ceilings under any Federal or state law if married applicants voluntarily apply for and obtain individual accounts with the same creditor.

ECOA 1002.12(b)(1)-(7) 

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.12(b)(1) through (b)(7) requires a creditor to retain certain records for prescribed timeframes for consumer and business applications, existing accounts, other applications, investigation or enforcement proceedings for alleged violation of the Act or this part, self-testing, and prescreened credit solicitations.

ECOA 1002.13(a)-(c)       

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.13(a) through (c), requires a creditor to request prescribed data on an application for the purchase or refinancing of a dwelling that is occupied or to be occupied by the applicant as a principal residence.  If the applicant(s) chooses not to provide the information or any part of it, this section requires the creditor to note this on the form and to the extent possible, note the prescribed data on the basis of visual observation or surname. Further, this section requires a creditor to advise the applicant(s) that the information is being requested by the Federal Government for the purpose of monitoring compliance with Federal statutes and that if the applicant(s) chooses not to provide the information, the creditor is required to document the prescribed data based on visual observation or surname.

ECOA 1002.14(a)(1)-(4) 

The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), as implemented by Regulation B, 12 C.F.R. § 1002.14(a)(1) through (a)(4), requires a creditor to provide an applicant, at no charge, a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling, whether the credit is extended or denied, or the application is incomplete or withdrawn, within prescribed timeframes.  A creditor may not provide the required copies of appraisals and other written valuations in electronic form unless the consumer consents and the creditor complies with other applicable provisions of the E-Sign Act (15 U.S.C. § 7001 et seq.). Further, this section requires a creditor, to mail or deliver to an applicant a notice in writing of the applicant’s right to receive a copy of all written appraisals developed in connection with the application, within prescribed timeframes.     

Expedited Funds Availability Act/Regulation CC

EFAA 229.10     

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.10, requires a financial institution to make available for withdrawal cash deposits made in person to an employee of the bank, electronic payments, and certain check deposits not later than the business day after the banking day on which the bank received the deposit.  The financial institution must make available for withdrawal funds deposited in an account by cash not made in person to an employee of the bank and checks not deposited in person not later than the second business day after the banking day on which the funds are deposited.  In addition, the financial institution must make the lesser of the applicable dollar amount provided in § 229.10(c)(1)(vii)(A) or the customer’s daily aggregate deposits of checks not subject to the next-day availability rules under § 229.10(c)(1)(ii) through (vi) available on the next business day.

As a condition to making the funds available for withdrawal in accordance with this section, the financial institution may require the use of a special deposit slip or envelope for certain checks.  If the institution requires the use of such special deposit slip, § 229.10(c)(3)(ii) requires the financial institution to either provide the special deposit slip or deposit envelope to its customers or inform them of how the special deposit slip or envelope may be prepared or obtained. Financial institutions must make the special deposit slip or envelope reasonably available.

EFAA 229.12     

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.12(b), requires a financial institution to make funds deposited in an account for local and certain other checks available for withdrawal not later than the second business day following the banking day on which funds are deposited.  The Federal Reserve Board of Governors adopted check-processing requirements that have effectively eliminated the distinction in the requirements for the availability of funds for withdrawal between local and non-local checks.  Thus, local and nonlocal checks should be treated the same in terms of funds availability under Regulation CC except as permitted in

§ 229.12(d) through (f).

EFAA 229.13     

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.13, requires a financial institution to follow certain procedures for exceptions related to new accounts, large deposits, redeposited checks, repeated overdrafts, reasonable cause to doubt collectability, and emergency conditions as prescribed by § 229.13(a) through (f).  When the financial institution extends the time of deposits subject to exceptions in § 229.13(b) through (e), the financial institution must provide the depositor with a notice in accordance with § 229.13(g)(1) through (g)(4).  The financial institution must also retain a record of each notice provided pursuant to the reasonable cause exception under § 229.13(e) with a brief statement of the facts giving rise to the financial institution’s reason to doubt the collectability of the check in accordance with § 229.13(g)(5).  Finally, § 229.13(h) requires that, if a financial institution imposes one of the exceptions in § 229.13(b) through (f), the times periods may be extended only in accordance with the "reasonable period of time" parameters outlined in § 229.13(h)(1) through (h)(4).

EFAA 229.14       

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.14, requires a financial institution to begin to accrue interest on funds deposited into interest-bearing accounts no later than the business day on which the financial institution receives provisional credit for the funds.

EFAA 229.15(a)-(b)         

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.15 (a) and (b), requires a financial institution to provide disclosures clearly and conspicuously in writing.  The disclosures must be in a form the consumer can keep apart from the exceptions in § 229.15(a) (these exceptions are otherwise covered in § 229.18).  The disclosures shall be grouped together and not contain information unrelated to the disclosures required by subpart B of Regulation CC.  In addition, the disclosure must contain uniform references to the day of availability.

EFAA 229.16(a)-(c)          

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.16(a) through (c), requires a financial institution to provide a disclosure before opening a new account and upon request as required by §§ 229.17 and 229.18(d), describing the financial institution’s policy as to when funds deposited in an account are available for withdrawal, reflecting the policy followed by the financial institution in “most cases.”  The specific availability policy disclosure must include, as applicable, the items listed under § 229.16(b)(1) through (b)(5).  A financial institution that has a policy of making deposited funds available for withdrawal sooner than required must meet the disclosure and notice requirements of § 229.16(c).

EFAA 229.17     

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.17, requires a financial institution to provide a potential customer with the applicable specific availability policy disclosure in § 229.16 before opening a new account.

EFAA 229.18     

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.18, requires a financial institution to provide additional disclosures on preprinted deposit slips, at locations where employees accept consumer deposits, on automated teller machines, and upon request, as required by § 229.18(a) through (d).  In addition, the financial institution must send a notice to consumers regarding changes in policy pursuant to the timeframes prescribed under § 229.18(e).

EFAA 229.19(a)-(b)         

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.19(a) and (b), requires that a financial institution follow certain availability schedules for funds mailed to the depository institution; funds deposited at an ATM, night depository, lock box, or similar facility; or funds deposited at a staffed facility or contractual branch if such deposits are made by certain times.

EFAA 229.19(f)

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.19(f), requires a financial institution to establish procedures to ensure that it complies with the requirements of Subpart A of Regulation CC, and must provide each employee who performs duties subject to the requirements of Subpart A with a statement of the procedures applicable to that employee.

EFAA 229.21(g)

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.21(g), requires a financial institution to retain evidence of compliance with the requirements imposed by Subpart B for at least two years.

EFAA 229.51(b)

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.51(b), requires a financial institution that is the reconverting bank to ensure that a substitute check bears all indorsements applied by parties that previously handled the check in any form for forward collection or return; identifies the converting financial institution in a manner that preserves any previous reconverting-financial institution’s identifications; and identifies the financial institution that truncated the original check.

EFAA 229.52

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.52, requires that a financial institution that transfers, presents, or returns a substitute check (or a paper or electronic representation of a substitute check) for which it receives consideration, warrants to the parties listed under § 229.52(b) that: the substitute check meets the requirements for legal equivalence outlined under § 229.51(a)(1) and (a)(2); and no financial institution will receive presentment or return of, or otherwise be charged for, the substitute check, the original check, or a paper or electronic representation of the substitute check such that that person will be asked to make a payment based on a check that it has already paid.  Under § 229.52(b), a financial institution that rejects a check submitted for deposit or returns a substitute check to its customers provides these warrants regardless of whether or not the bank received consideration.

EFAA 229.53       

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.53(a), requires a financial institution that transfers, presents, or returns a substitute check or a paper or electronic representation of a substitute check for which it receives consideration, to indemnify the recipient and any subsequent recipient for any loss incurred by any recipient of a substitute check if that loss occurred due to the receipt of a substitute check instead of the original check.  In addition, the financial institution must meet the indemnity amount requirements under § 229.53(b).

EFAA 229.54(b)

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.54(b), requires a financial institution to ensure that if the consumer cannot submit his or her claim by the time specified under § 229.54(b)(1)(i) because of extenuating circumstances, the financial institution shall extend the 40-calendar-day period by an additional reasonable amount of time.  In addition, if the consumer fails to provide all the required information under § 229.54(b)(2)(i), the financial institution must inform the consumer that the claim is not complete and identify the information that is missing. The financial institution holding the account subject to the consumer’s claim may require the consumer to submit the information required by § 229.54(b)(3) in writing and, if so, the financial institution must follow the requirements of § 229.54(b)(3)(i) through (b)(3)(iii).

EFAA 229.54(c)-(e)

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.54(c), requires a financial institution in evaluating a consumer’s claim to follow the procedures outlined under § 229.54(c)(1) through (c)(4) regarding recrediting the consumer’s account, sending the consumer notice, recrediting a pending investigation, and reversing the recredit, as appropriate.  The financial institution must also meet next-day availability requirements under § 229.54(d)(1), unless it meets the safeguard exceptions provided by § 229.54(d)(2), in which case the financial institution may not impose an overdraft fee with respect to drafts drawn by the consumer on such recredited funds until the timeframe prescribed under § 229.54(d)(3).  In addition, the financial institution must meet the notice requirements of § 229.54(e) regarding recredits, invalid claims, and reversal of recredits.

EFAA 229.57(a)-(b)         

The Expedited Funds Availability Act (12 U.S.C. § 4001 et seq.), as implemented by Regulation CC, 12 C.F.R. § 229.57(a) and (b), requires a financial institution to provide a brief disclosure to consumer customers that describes that a substitute check is the legal equivalent of an original check and the consumer recredit rights that apply when a consumer in good faith believes that a substitute check was not properly charged to his or her account. The financial institution must provide the disclosures according to requirements under § 229.57(b) to consumers who receive paid checks with periodic account statements and consumers who receive substitute checks on an occasional basis.

Fair Credit Reporting Act/Regulation V

FCRA 604(b)(2)-(3)           

Section 604(b)(2) and (3) of the Fair Credit Reporting Act (15 U.S.C. § 1681b(b)(2) and (3)), requires the user of a consumer report for employment purposes to disclose in writing to the consumer, before the report is procured or caused to be procured, that a consumer report may be obtained for employment purposes.  The user of such consumer reports must obtain the consumer's written authorization to procure the consumer report.  Additionally, before taking any adverse action, based in whole or in part on the consumer report, this section requires the user of a consumer report to provide the consumer a copy of the report and a written description of the rights of the consumer under the Act.

FCRA 604(f)        

Section 604(f) of the Fair Credit Reporting Act (15 U.S.C. § 1681b(f)), prohibits the user of a consumer report from using or obtaining a consumer report for any purpose other than a purpose for which the consumer report is authorized to be furnished and that purpose is certified in accordance with the Act.

FCRA 604(g)(2); 1022.30(b)          

Section 604(g)(2) of the Fair Credit Reporting Act (15 U.S.C. § 1681b(g)(2)), as implemented by Regulation V, 12 C.F.R. § 1022.30(b), prohibits a creditor from obtaining or using medical information pertaining to a consumer in connection with any determination of the consumer’s eligibility, or continued eligibility, for credit, except as provided in § 604(g)(3)(C) of the Fair Credit Reporting Act or § 1022.30(d) of Regulation V.

FCRA 605(g)      

Section 605(g) of the Fair Credit Reporting Act (15 U.S.C. § 1681c(g)) prohibits any person that accepts credit or debit cards for the transaction of business from printing more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.  This prohibition applies only to electronically printed receipts and not to transactions in which the sole means of recording a credit card or debit card account number is by handwriting or by an imprint or copy of the card.

FCRA 605A(h)(1)(B)        

Section 605A(h)(1)(B) of the Fair Credit Reporting Act (15 U.S.C. § 1681c-1(h)(1)(B)), prohibits a prospective user of a consumer report that includes an initial fraud alert or an active duty alert in accordance with this section, from establishing a new credit plan or extension of credit, other than under an open-end credit plan (as defined in § 103(j) of the Truth in Lending Act (15 U.S.C. § 1602(j)), in the name of the consumer, or issue an additional card on an existing credit account requested by a consumer, or grant any increase in credit limit on an existing credit account requested by a consumer, unless the user utilizes reasonable policies and procedures to form a reasonable belief that the user knows the identity of the person making the request.  If a consumer requesting the fraud or active duty alert has specified a telephone number to be used for identity verification purposes, before authorizing any new credit plan or extension in the name of such consumer, a user of such consumer report must contact the consumer using that telephone number or take such other reasonable steps to verify the consumer's identity and confirm that the application for a new credit plan is not the result of identity theft.

FCRA 605A(h)(2)(B)

Section 605A(h)(2)(B) of the Fair Credit Reporting Act (15 U.S.C. § 1681c-1(h)(2)(B)), prohibits a prospective user of a consumer report or of a credit score generated using the information in the file of a consumer that includes an extended fraud alert in accordance with this section from establishing a new credit plan or extension of credit, other than under an open-end credit plan (as defined in § 103(j) of the Truth in Lending Act (15 U.S.C. § 1602(j)), in the name of the consumer, or issue an additional card on an existing credit account requested by a consumer, or any increase in credit limit on an existing credit account requested by a consumer, unless the user contacts the consumer in person, or by telephone number or other reasonable contact method designated by the consumer, to confirm that the application for a new credit plan or increase in credit limit, or request for an additional card is not the result of identity theft. 

FCRA 606(a)-(b)

Section 606(a) and (b) of the Fair Credit Reporting Act (15 U.S.C. § 1681d(a) and (b)), prohibits any person from procuring or requesting an investigative consumer report to be prepared unless it is disclosed to the consumer in writing that an investigative consumer report may be made and that the consumer has a right to request additional disclosures as provided under the Act.  This disclosure is required to be mailed, or otherwise delivered, not later than three days after the date on which the report was first requested, and must include a written summary of the rights of the consumer prepared pursuant to § 609(c) of the Fair Credit Reporting Act (15 U.S.C. § 1681g(c)).

The person, who procures or requests the investigative consumer report, must certify to the consumer reporting agency that the disclosures under this section were made within prescribed timeframes and that it will comply with the requirements related to requests for additional information from the consumer.  If the consumer submits a request for additional information in the manner provided under this section, the person who procures or requests the investigative consumer report must mail or otherwise deliver a complete and accurate written disclosure of the nature and scope of the investigation requested to the consumer not later than five days after the date on which the request for the disclosure was received from the consumer or the report was first requested, whichever is the later.

FCRA 607(e)(1)-(2)          

Section 607(e)(1) and (e)(2) of the Fair Credit Reporting Act (15 U.S.C. § 1681e(e)(1)–(2)), prohibits any person from procuring a consumer report for purposes of reselling the report (or any information in the report) unless the person:

(1) discloses to the credit reporting agency that furnished the report the identity of the end user of the report;

(2) certifies the permissible purpose for which the report is being furnished;

(3) certifies the report will be used for no other purposes; and

(4) takes reasonable steps to ensure that the identifications and certifications are accurate before the information is sold.

FCRA 609(e)(1)-(2)          

Section 609(e)(1) and (e)(2) of the Fair Credit Reporting Act (15 U.S.C. § 1681g(e)(1)-(2)), requires that, within 30 days of receiving a written request from an alleged victim of identity theft, a business entity that has otherwise entered into a commercial transaction for consideration with a person who has allegedly made unauthorized use of a victim’s identity, must provide a copy of all documents and transaction records, evidencing any transaction alleged to be the result of identity theft to: (A) the victim; (B) any Federal, State, or local government law enforcement agency or officer specified by the victim in such a request; or (C) any law enforcement agency investigating the identity theft and authorized by the victim to take receipt of records provided under this subsection.

Prior to providing any documents or records required under § 609(e)(1) (15 U.S.C. § 1681g(e)(1)), the business entity must comply with the verification of identity and claim requirements under § 609(e)(2) (15 U.S.C. § 1681g(e)(2)), unless the business entity, at its discretion, otherwise has a high degree of confidence that it knows the identity of the victim making the request.

FCRA 609(g)(1)

Section 609(g)(1) of the Fair Credit Reporting Act (15 U.S.C. § 1681g(g)(1)), requires any person, who makes or arranges loans and who uses a consumer credit score as defined in subsection (f) of this section in connection with an application for a consumer closed-end or open-end loan that is secured by a 1 to 4 unit residential real property, to provide the credit score and certain other information required by subsection (f) of this section including the "NOTICE TO THE HOME LOAN APPLICANT," as soon as is reasonably practicable.

FCRA 615(a)     

Section 615(a) of the Fair Credit Reporting Act (15 U.S.C. § 1681m(a)), requires the user of a consumer report to provide oral, written, or electronic notice of any adverse action taken against a consumer, if such action is based in whole or in part on any information contained in the consumer report.  The notice must contain all of the following:

(1)  the name, address, and telephone number of the consumer reporting agency (including a toll-free number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report, and a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken;

(2) an advisement of the consumer’s right to obtain a free copy of a consumer report within the specified 60 day time period, and to dispute with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency; and

(3) a written or electronic disclosure of a numerical score as defined in § 609(f)(2)(A) (15 U.S.C. § 1681g(f)(2)(A)), that was used by the person taking any adverse action based in whole or in part on any information in a consumer report, and the information as set forth in subparagraphs (B) through (E) of § 609(f)(1) (15 U.S.C. § 1681g(f)(1)).

FCRA 615(b)(1)

Section 615(b)(1) of the Fair Credit Reporting Act (15 U.S.C. § 1681m(b)(1)), requires that, whenever credit for personal, family, or household purposes is denied or the cost increased based on information received from a third party other than a consumer reporting agency, a creditor must disclose the nature of the third-party information within a reasonable period of time of a written request from the consumer.

FCRA 615(d); 1022.54    

Section 615(d) of the Fair Credit Reporting Act (15 U.S.C. § 1681m(d)) and § 1022.54 of Regulation V, 12 C.F.R. § 1022.54, require the user of a consumer report, in connection with any credit or insurance transaction that is not initiated by the consumer and that consists of a firm offer of credit or insurance, to provide, with each written solicitation made to the consumer, a clear and conspicuous statement containing the information set forth in § 615(d)(1)(A) through (E) of the Fair Credit Reporting Act (15 U.S.C. § 1681m(d)(1)(A)-(E)), including, but not limited to, the following: that information contained in the consumer’s credit report was used in connection with the transaction; that the consumer received the offer because the consumer satisfied the criteria for the offer; and that the consumer may prohibit information in the consumer’s credit file from being used in unsolicited credit or insurance offers in the future.  The user must also provide a prescreen opt-out notice in both a short form and a long form, which must be in the same language as the offer of credit or insurance.  The notices must be clear and conspicuous and simple and easy to understand, and must conform to the requirements set forth in 12 C.F.R. § 1022.54(c)(1) and (c)(2).

FCRA 615(g)      

Section 615(g) of the Fair Credit Reporting Act (15 U.S.C. § 1681m(g)), requires a debt collector acting on behalf of a third party that is a creditor or other user of a consumer report, is notified that any information relating to a debt that the debt collector is attempting to collect may be fraudulent or may be the result of identity theft, that person must:

(1) notify the third party that the information may be fraudulent or may be the result of identity theft; and

(2) upon request of the consumer to whom the debt purportedly relates, provide to the consumer all information to which the consumer would otherwise be entitled if the consumer were not a victim of identity theft, but wished to dispute the debt under provisions of law applicable to that person.

FCRA 623(a)(1)-(5); (8); 1022.42 

Section 623(a)(1) through (a)(5) and § 623(a)(8) of the Fair Credit Reporting Act (15 U.S.C. § 1681s-2(a)), requires furnishers of information to consumer reporting agencies to provide accurate information relating to the consumer, and to follow certain procedures set forth in § 623(a), as applicable, to correct and update such information.  Further, § 1022.42 of Regulation V, 12 C.F.R. § 1022.42, requires a financial institution that meets the definition of "furnisher" to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information relating to consumers that it furnishes to a consumer reporting agency.  Each furnisher must consider and appropriately incorporate the guidelines in Appendix E of Regulation V in developing its policies and procedures, and must periodically review its policies and procedures and update them as necessary to ensure their continued effectiveness.

FCRA 623(a)(6)

Section 623(a)(6) of the Fair Credit Reporting Act (15 U.S.C. § 1681s-2(a)(6)), requires furnishers of information to consumer reporting agencies to have in place reasonable procedures to respond to any notification it receives from a consumer reporting agency regarding information resulting from identity theft to prevent that furnisher from refurnishing such blocked information under § 605B (15 U.S.C. § 1681c-2).  In addition, if a consumer properly submits an identity theft report to the furnisher of information, that furnisher may not furnish such information that purports to relate to the consumer to any consumer reporting agency, unless the furnisher subsequently knows or is informed by the consumer that the information is correct.

FCRA 623(a)(7)

Section 623(a)(7) of the Fair Credit Reporting Act (15 U.S.C. § 1681s-2(a)(7)), requires any financial institution that extends credit, and regularly and in the ordinary course of business furnishes information to a nationwide consumer reporting agency, to provide a notice to customers in writing, when negative information about the customer is provided to the nationwide consumer reporting agency.  This notice must be provided before negative information is furnished, or within 30 days after furnishing the negative information.  After the notice is provided, a financial institution may submit additional negative information to a nationwide consumer reporting agency with respect to the same transaction, extension of credit, account, or customer without providing additional notice to the customer.  A financial institution is not liable for failing to provide the required notice if, at the time of the failure, the financial institution maintained reasonable policies and procedures to comply with the requirements of this section or reasonably believed it was prohibited by law from contacting the consumer.

FCRA 623(b); 1022.43

Section 623(b) of the Fair Credit Reporting Act (15 U.S.C. § 1681s-2(b)), requires furnishers of information to consumer reporting agencies to follow certain procedures set forth in § 623(b) upon notice of a dispute with regard to the completeness or accuracy of any information provided to a consumer reporting agency.  Further, § 1022.43 of Regulation V, 12 C.F.R. § 1022.43, requires a financial institution that meets the definition of "furnisher" and that receives a direct dispute from a consumer to conduct a reasonable investigation of the direct dispute if it relates to the information specified in § 1022.43(a)(1) through (a)(4), unless specifically exempted by § 1022.43(b).  The financial institution must conduct the investigation in accordance with the requirements in § 1022.43(e).  If the financial institution determines that the dispute is frivolous or irrelevant, it must notify the consumer of that determination not later than five business days after making the determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the furnisher.  The notice must include the reasons for such determination and identify any information required to investigate the disputed information.

FCRA 1022.21(a)(1);24(a);25(a)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. §§ 1022.21(a)(1), 1022.24(a), and 1022.25(a), prohibits a financial institution, unless an exception set forth in § 1022.21(c) applies, from using eligibility information about a consumer that the institution receives from an affiliate, to make a solicitation for marketing purposes to the consumer, unless:

(i) It is clearly and conspicuously disclosed to the consumer in writing or, if the consumer agrees, electronically, in a concise notice that the institution may use eligibility information about that consumer received from an affiliate to make solicitations for marketing purposes to the consumer;

(ii) The consumer is provided a reasonable and simple opportunity and method to “opt out,” or prohibit the institution from using eligibility information to make solicitations for marketing purposes to the consumer; and

(iii) The consumer has not opted out.

FCRA 1022.21(a)(3)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.21(a)(3), requires that the notice in § 1022.21(a)(1) be provided:

(i) By an affiliate that has or has previously had a pre-existing business relationship with the consumer; or

(ii) As part of a joint notice from two or more members of an affiliated group of companies, provided that at least one of the affiliates on the joint notice has or has previously had a pre-existing business relationship with the consumer.

FCRA 1022.22(a)(5)        

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.22(a)(5), requires a financial institution to give a consumer a new opt-out notice if, after all continuing relationships with the financial institution or its affiliate(s) are terminated, the consumer subsequently establishes another continuing relationship with the financial institution or its affiliate(s) and the consumer’s eligibility information is to be used to make a new solicitation.  The new opt-out notice must apply, at a minimum, to eligibility information obtained in connection with the new continuing relationship.  Consistent with § 1022.22(b), the consumer’s decision not to opt out after receiving the new opt-out notice would not override a prior opt-out election by the consumer that applies to eligibility information obtained in connection with a terminated relationship, regardless of whether the new opt-out notice applies to eligibility information obtained in connection with the terminated relationship.

FCRA 1022.22(b)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.22(b), requires that the election of a consumer to opt out must be effective for a period of at least five years beginning when the consumer's opt-out election is received and implemented, unless the consumer revokes the opt-out in writing or, if the consumer agrees, electronically.

FCRA 1022.23(a)(1)        

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.23(a)(1), requires that an opt-out notice be clear, conspicuous, and concise, and accurately disclose the information detailed in § 1022.23(a)(1)(i) through (a)(1)(viii).

FCRA 1022.23(a)(2)        

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.23(a)(2), requires that if two or more consumers jointly obtain a product or service, the opt-out notice must explain how an opt-out direction by a joint consumer will be treated.  An opt-out direction by a joint consumer may be treated as applying to all of the associated joint consumers, or each joint consumer may be permitted to opt out separately.  If each joint consumer is permitted to opt out separately, one of the joint consumers must be permitted to opt out on behalf of all joint consumers and the joint consumers must be permitted to exercise their separate rights to opt out in a single response.   Further, it is impermissible to require all joint consumers to opt out before implementing any opt-out direction.

FCRA 1022.26(a)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.26(a), requires the opt-out notice be provided so that each consumer can reasonably be expected to receive actual notice.

FCRA 1022.27(a)-(d)       

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.27(a) through (d), prohibits solicitations based on eligibility information an institution receives from an affiliate to a consumer who previously opted out after the expiration of the opt-out period unless the consumer has been given a renewal notice that complies with the requirements of §§ 1022.24 through 1022.26, a reasonable and simple method to renew the opt-out, and the consumer does not opt out, or an exception of § 1022.21(c) applies.  The renewal notice must be provided by the affiliate that provided the previous opt-out notice, or its successor, or as part of a joint renewal notice from two or more members of an affiliated group of companies, or their successors, that jointly provided the previous opt-out notice.  The renewal opt-out notice must be clear, conspicuous, and concise, accurately disclose the required information listed in §1022.27(b)(1) through (b)(8), and follow the timing requirements noted in § 1022.7(c). The opt-out period may not be shortened by sending a renewal notice to the consumer before expiration of the opt-out-period, even if the consumer does not renew the opt-out.

FCRA 1022.31(b)             

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.31(b), prohibits a person from disclosing medical information about a consumer, received from a consumer reporting agency or its affiliate, to any other person, except as necessary to carry out the purpose for which the information was initially disclosed, or as otherwise permitted by statute, regulation, or order.

FCRA 1022.72(a)-(d)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.72(a) through (d), requires a person to provide a risk-based pricing notice to a consumer, as determined under § 1022.72(a) and (b), in the form and manner required by this subpart unless an exception set forth in § 1022.74 applies.  Additionally, such a person must provide a risk-based pricing notice to a consumer in the form and manner required by this subpart if the person uses a consumer report in connection with a review of credit that has been extended to the consumer, and based in whole or in part on the consumer report, the annual percentage rate is increased.

FCRA 1022.73(a)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.73(a), requires the risk-based pricing notice required by § 1022.72(a) or (c) to include the information specified in § 1022.73 (a)(1)(i) through (a)(1)(ix), and the risk-based pricing notice required by § 1022.72(d) to include the information specified in paragraphs § 1022.73(a)(2)(i) through (a)(2)(ix).

FCRA 1022.73(b)-(c)       

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.73(b) and (c), requires that the risk-based pricing notice required by § 1022.72(a), (c), or (d), be clear and conspicuous; and provided to the consumer in oral, written, or electronic form.  Such a notice shall be provided in accordance with the timing requirements specified in § 1022.73(c)(1) through (c)(3).

FCRA 1022.75(a)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.75(a), states that a consumer is entitled to receive no more than one risk-based pricing notice under § 1022.72(a) or (c), or one notice under § 1022.74(d), (e), or (f), for each grant, extension, or other provision of credit; however, a risk-based pricing notice must be provided whenever the conditions set forth in § 1022.72(d) have been met, even if a consumer has previously received a risk-based pricing notice in connection with a grant, extension, or other provision of credit.

FCRA 1022.75(b)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.75(b), requires the person to whom a credit obligation is initially payable, to provide the risk-based pricing notice described in § 1022.74(a) or (c), or satisfy the requirements for, and provide the notice required under one of the exceptions in § 1022.74(d), (e), or (f), even if that person immediately assigns the credit agreement to a third party and is not the source of funding for the credit.

FCRA 1022.75(c)              

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.75(c), requires a person to provide a risk-based pricing notice to each consumer in a transaction involving two or more consumers who are granted, extended, or otherwise provided credit in order to satisfy the requirements of § 1022.72(a) or (c), or the exceptions in § 1022.74(d), (e), or (f).  Whether the consumers have the same address or not, the person must provide a separate notice to each consumer, if a notice includes a credit score(s). Each separate notice must contain only the credit score(s) of the consumer to whom the notice is provided, and not the credit score(s) of the other consumer.  If the consumers have the same address, and the notice does not include a credit score(s), a person may satisfy the requirements of § 1022.75(c)(1) by providing a single notice addressed to both consumers.

FCRA 1022.82(c)              

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.82(c), requires a user of consumer reports to develop and implement reasonable policies and procedures designed to enable the user to form a reasonable belief that a consumer report relates to the consumer about whom it has requested the report, when the user receives a notice of address discrepancy.

FCRA 1022.82(d)             

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by Regulation V, 12 C.F.R. § 1022.82(d), requires a user to develop and implement reasonable policies and procedures for furnishing an address for the consumer that the user has reasonably confirmed is accurate to the consumer reporting agency from whom it received the notice of address discrepancy when the user:

(i) can form a reasonable belief that the consumer report relates to the consumer;

(ii) establishes a continuing relationship with the consumer; and

(iii) regularly and in the ordinary course of business furnishes information to the consumer reporting agency from which the notice of address discrepancy was obtained.

Further, the policies and procedures must provide that the user will furnish the consumer's address to the consumer reporting agency as part of the information it regularly furnishes for the reporting period in which it establishes a relationship with the consumer.

FCRA 334.91(c)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by part 334 of the FDIC Rules and Regulations, 12 C.F.R. § 334.91(c), requires a card issuer to establish and implement reasonable policies and procedures to assess the validity of a change of address if it receives notification of a change of address for a consumer's debit or credit card account and, within a short period of time afterwards (during at least the first 30 days after it receives notification), the card issuer receives a request for an additional or replacement card for the same account. Under these circumstances, the card issuer may not issue an additional or replacement card, until the card issuer:

(1) notifies the cardholder of the request at the cardholder’s former address or by other means of communication that the card issuer and the cardholder have previously agreed to, and provides the cardholder with a reasonable means of reporting incorrect address changes; or

(2) otherwise assesses the validity of the change of address in accordance with its policies and procedures that the cardholder has established pursuant to § 334.90 of this part.

FCRA 334.91(e)

The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), as implemented by part 334 of the FDIC Rules and Regulations, 12 C.F.R. § 334.91(e), requires that any written or electronic notice the card issuer provides must be clear and conspicuous and provided separately from its regular correspondence with the cardholder.

Fair Debt Collection Practices Act

FDCPA 1006.6(b)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.6(b), prohibits a debt collector, except as permitted under § 1006.6(b)(2)(i) or (ii) and § 1006.6(b)(4), from communicating or attempting to communicate with a consumer in connection with the collection of any debt at unusual or inconvenient times or places as described under § 1006.6(b)(1), when represented by an attorney as described under § 1006.6(b)(2), and at the consumer’s place of employment as described under § 1006.6(b)(3).

FDCPA 1006.6(c)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.6(c), prohibits a debt collector, except as specified in § 1006.6(c)(2), from communicating or attempting to communicate further with a consumer, if the consumer notifies the debt collector in writing that the consumer refuses to pay a debt or that the consumer wants the debt collector to cease further communication with the consumer.

FDCPA 1006.6(d)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.6(d), prohibits a debt collector from communicating with any person other than those specified by § 1006.6(d)(1)(i) through (d)(1)(vi) in connection with the collection of any debt, unless an exception applies under § 1006.6(d)(2).  In addition, debt collectors must maintain reasonable procedures for email and text message communications as required by § 1006.6(d)(3) through (d)(5).

FDCPA 1006.6(e)]

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.6(e), requires a debt collector who communicates or attempts to communicate with a consumer electronically in connection with the collection of a debt, to provide a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate to an e-mail address, other electronic-medium address, or telephone number.  The debt collector may not require, directly or indirectly, that the consumer, in order to opt out, pay any fee to the debt collector or provide any information other than the consumer’s opt-out preferences and the email address, telephone number for text messages, or other electronic-medium address subject to the opt-out request.

FDCPA 1006.10

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.10, requires a debt collector to follow the form and content of communication requirements specified by § 1006.10(b) and the frequency of communication requirements specified by § 1006.10(c), when communicating with a person other than the consumer for the purpose of acquiring location information about a consumer.

FDCPA 1006.14

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.14, prohibits a debt collector from engaging in any conduct where the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, including, but not limited to, the conduct described in § 1006.14(b) through (h).

FDCPA 1006.18(a)-(d)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.18(a) through (d), prohibits a debt collector from using any false, deceptive, or misleading representation or means in connection with the collection of any debt, including, but not limited to, the conduct described in § 1006.18(b) through (d).

FDCPA 1006.18(e)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.18(e), requires a debt collector, except as permitted in § 1006.18(e)(3), to make the disclosures under § 1006.18(e)(1) for initial communications with the consumer and § 1006.18(e)(2) for subsequent communications with the consumer.  As required by § 1006.18(e)(4), a debt collector must make the disclosures required under § 1006.18(e)(1) and (e)(2) in the same language(s) used for the rest of the communication in which the debt collector conveyed the disclosures.  Any translation of the disclosures a debt collector uses must be complete and accurate.

FDCPA 1006.18(f)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.18(f), requires that if a debt collector uses an assumed name when communicating or attempting to communicate with a person, the assumed name must be used by the employee consistently and the debt collector must be able to readily identify any employee using an assumed name.

FDCPA 1006.22

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.22, prohibits a debt collector from using unfair or unconscionable means to collect or attempt to collect any debt, including but not limited to, the conduct described in § 1006.22(b) through (f).

FDCPA 1006.26(b)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.26(b), prohibits a debt collector from bringing or threatening to bring a legal action against a consumer to collect a time-barred debt.  This paragraph (b) does not apply to proofs of claim filed in connection with a bankruptcy proceeding.

FDCPA 1006.30(a)

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.30(a), prohibits a debt collector, except as permitted in § 1006.30(a)(2), from furnishing information about the debt to a consumer reporting agency before the debt collector takes the actions described in § 1006.30(a)(1)(i) or (a)(1)(ii).

FDCPA 1006.30(b)           

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.30(b), prohibits a debt collector, except as provided in § 1006.30(b)(2), from selling, transferring for consideration, or placing for collection a debt if the debt collector knows or should know that the debt has been paid or settled or discharged in bankruptcy.

FDCPA 1006.30(c)            

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.30(c), requires that if a consumer makes any single payment to a debt collector with respect to multiple debts owed by the consumer to the debt collector, the debt collector: (1) must not apply the payment to any debt that is disputed by the consumer; and (2) if applicable, must apply the payment in accordance with the consumer’s directions.

FDCPA 1006.30(d)           

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.30(d), requires a debt collector who brings a legal action against a consumer, other than to enforce an interest in real property securing the consumer’s debt, to bring such action only in the judicial district or similar legal entity in which the consumer signed the contract sued upon or in which the consumer resides at the commencement of the action.

FDCPA 1006.30(e)           

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.30(e), prohibits a debt collector from designing, compiling, and furnishing any form that the debt collector knows would be used to cause a consumer to falsely believe that a person other than the consumer’s creditor is participating in collecting, or attempting to collect, a debt that the consumer allegedly owes to the creditor.

FDCPA 1006.34

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.34, requires a debt collector, except as provided in § 1006.34(a)(2), to provide a consumer with the validation information required by § 1006.34(c) either by sending the consumer a validation notice in a manner prescribed by § 1006.42, or by providing the validation information orally in the initial communication notice.  As required under § 1006.34(d), the validation information under paragraph (c) of this section must be clear and conspicuous.

FDCPA 1006.38

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.38, prohibits a debt collector from engaging in any collection activities or communications that overshadow or are inconsistent with the disclosure of the consumer’s rights to dispute the debt and to request the name and address of the original creditor. If the consumer requests information about the original creditor in writing and within the validation period, a debt collector must cease collection of the debt until the debt collector satisfies the requirements of § 1006.38(c)(1) or (c)(2).  If the consumer disputes the debt in writing and within the validation period, the debt collector must cease collection of the debt or any disputed portion of the debt until the debt collector satisfies § 1006.38(d)(2)(i) or (ii).

FDCPA 1006.42

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.42, requires a debt collector, except as provided for under § 1006.42(a)(2), who sends disclosures required by the Act and this part in writing or electronically must do so in a manner that is reasonably expected to provide actual notice, and in a form that the consumer may keep and access later.  To comply with § 1006.42(a), a debt collector must comply with the requirements of § 1006.42(b) for certain disclosures sent electronically.

FDCPA 1006.100             

The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), as implemented by Regulation F, 12 C.F.R. § 1006.100, requires a debt collector, except as permitted under § 1006.100(b), to retain records that are evidence of compliance or noncompliance with the FDCPA and this part starting on the date the debt collector begins collection activity on a debt until three years after the debt collector’s last collection activity on the debt.

Fair Housing Act

FHA 338.3          

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the FDIC’s Fair Housing regulations, 12 C.F.R. § 338.3, requires an FDIC-supervised institution that advertises loans covered by the Fair Housing Act to prominently indicate in its advertising that it makes such loans without regard to race, color, religion, national origin, sex handicap, or familial status.  An FDIC-supervised institution may satisfy this requirement by including the Equal Housing Lender or Equal Housing Opportunity logotype and legend in written advertisements and the statement "Equal Housing Lender" or "Equal Opportunity Lender" in oral advertisements.  Further, this section prohibits the use of words, symbols, models or other forms of communication that express, imply, or suggest a discriminatory preference or policy of exclusion in violation of the provisions of the Fair Housing Act or the Equal Credit Opportunity Act.

FHA 338.4          

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the FDIC’s Fair Housing regulations, 12 C.F.R. § 338.4, requires FDIC-supervised institutions that make loans covered by the Fair Housing Act to display the Equal Housing Lender or Equal Housing Opportunity poster, which conforms to size and text specifications, in a central location within the FDIC-insured institution where deposits are received or loans covered by the Fair Housing Act are made.  The poster must be clearly visible to the general public entering the area where the poster is displayed.

FHA 338.9          

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the FDIC’s Fair Housing regulations, 12 C.F.R. § 338.9, requires a bank which refers any applicants to a controlled entity as defined in § 338.6(b), and which purchases any home loans originated by the controlled entity, to require the controlled entity to enter into a written agreement with the bank. The agreement must provide that the entity will: (a) comply with the requirements of §§ 338.3, 338.4 and 338.7, and, if otherwise subject to Regulation C (12 C.F.R. part 1003), also comply with § 338.8; (b) open its books and records to examination by the FDIC; and (c) comply with all instructions and orders issued by the FDIC with respect to its loan practices.

FHA 100.110(b) COLOR 

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.110(b), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of color.

FHA 100.110(b) FAM-STATUS

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.110(b), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of familial status.

FHA 100.110(b) HANDICAP         

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.110(b), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of handicap.

FHA 100.110(b) N-ORIG

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.110(b), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of national origin.

FHA 100.110(b) RACE    

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.110(b), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race.

FHA 100.110(b) RELIGION           

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.110(b), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of religion.

FHA 100.110(b) SEX       

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.110(b), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of sex.

FHA 100.120(a) COLOR 

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.120(a), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available loans or other financial assistance for a dwelling, because of color. Prohibited discrimination includes, but is not limited to, the practices described in § 100.120(b)(1) through (b)(4).

FHA 100.120(a) FAM-STATUS     

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.120(a), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available loans or other financial assistance for a dwelling, because of familial status.  Prohibited discrimination includes, but is not limited to, the practices described in § 100.120(b)(1) through (b)(4).

FHA 100.120(a) HANDICAP         

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.120(a), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available loans or other financial assistance for a dwelling, because of handicap.  Prohibited discrimination includes, but is not limited to, the practices described in § 100.120(b)(1) through (b)(4).

FHA 100.120(a) N-ORIG

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.120(a), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available loans or other financial assistance for a dwelling, because of national origin.  Prohibited discrimination includes, but is not limited to, the practices described in § 100.120(b)(1) through (b)(4).

FHA 100.120(a) RACE     

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.120(a), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available loans or other financial assistance for a dwelling, because of race. Prohibited discrimination includes, but is not limited to, the practices described in § 100.120(b)(1) through (b)(4).

FHA 100.120(a) RELIGION           

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.120(a), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available loans or other financial assistance for a dwelling, because of religion. Prohibited discrimination includes, but is not limited to, the practices described in § 100.120(b)(1) through (b)(4).

FHA 100.120(a) SEX       

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.120(a), prohibits any person or entity engaged in residential real estate-related transactions from discriminating against any person in making available loans or other financial assistance for a dwelling, because of sex. Prohibited discrimination includes, but is not limited to, the practices described in § 100.120(b)(1) through (b)(4).

FHA 100.125(a) COLOR

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.125(a), prohibits any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, from refusing to purchase such loans, debts, or securities, or imposing different terms or conditions for such purchases because of color. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.125(b)(1) through (b)(3).

FHA 100.125(a) FAM-STATUS

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.125(a), prohibits any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, from refusing to purchase such loans, debts, or securities, or imposing different terms or conditions for such purchases because of familial status.  Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.125(b)(1) through (b)(3).

FHA 100.125(a) HANDICAP         

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.125(a), prohibits any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, from refusing to purchase such loans, debts, or securities, or imposing different terms or conditions for such purchases because of handicap.  Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.125(b)(1) through (b)(3).

FHA 100.125(a) N-ORIG

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.125(a), prohibits any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, from refusing to purchase such loans, debts, or securities, or imposing different terms or conditions for such purchases because of national origin.  Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.125(b)(1) through (b)(3).

FHA 100.125(a) RACE    

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.125(a), prohibits any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, from refusing to purchase such loans, debts, or securities, or imposing different terms or conditions for such purchases because of race. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.125(b)(1) through (b)(3).

FHA 100.125(a) RELIGION

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.125(a), prohibits any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, from refusing to purchase such loans, debts, or securities, or imposing different terms or conditions for such purchases because of religion.  Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.125(b)(1) through (b)(3).

FHA 100.125(a) SEX       

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.125(a), prohibits any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, from refusing to purchase such loans, debts, or securities, or imposing different terms or conditions for such purchases because of sex. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.125(b)(1) through (b)(3).

FHA 100.130(a) COLOR

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.130(a), prohibits any person or entity engaged in the making of loans or in the provision of other financial assistance relating to loans covered by the Fair Housing Act from imposing different terms or conditions for the availability of such loans or other financial assistance because of color. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.130(b)(1) through (b)(5).

FHA 100.130(a) FAM-STATUS     

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.130(a), prohibits any person or entity engaged in the making of loans or in the provision of other financial assistance relating to loans covered by the Fair Housing Act from imposing different terms or conditions for the availability of such loans or other financial assistance because of familial status.  Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.130(b)(1) through (b)(5).

FHA 100.130(a) HANDICAP         

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.130(a), prohibits any person or entity engaged in the making of loans or in the provision of other financial assistance relating to loans covered by the Fair Housing Act from imposing different terms or conditions for the availability of such loans or other financial assistance because of handicap. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.130(b)(1) through (b)(5).

FHA 100.130(a) N-ORIG

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.130(a), prohibits any person or entity engaged in the making of loans or in the provision of other financial assistance relating to loans covered by the Fair Housing Act from imposing different terms or conditions for the availability of such loans or other financial assistance because of national origin.  Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.130(b)(1) through (b)(5).

FHA 100.130(a) RACE

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.130(a), prohibits any person or entity engaged in the making of loans or in the provision of other financial assistance relating to loans covered by the Fair Housing Act from imposing different terms or conditions for the availability of such loans or other financial assistance because of race. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.130(b)(1) through (b)(5).

FHA 100.130(a) RELIGION

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.130(a), prohibits any person or entity engaged in the making of loans or in the provision of other financial assistance relating to loans covered by the Fair Housing Act from imposing different terms or conditions for the availability of such loans or other financial assistance because of religion. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.130(b)(1) through (b)(5).

FHA 100.130(a) SEX

The Fair Housing Act (42 U.S.C. §§ 3601-3619), as implemented by the Department of Housing and Urban Development’s Fair Housing regulations, 24 C.F.R. § 100.130(a), prohibits any person or entity engaged in the making of loans or in the provision of other financial assistance relating to loans covered by the Fair Housing Act from imposing different terms or conditions for the availability of such loans or other financial assistance because of sex. Unlawful conduct under this section includes, but is not limited to, conduct described in § 100.130(b)(1) through (b)(5).

Flood Insurance Act

FLOOD 339.3(a)

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.3(a), prohibits an FDIC-supervised institution from making, increasing, extending, or renewing a designated loan secured by a building, a mobile home, or personal property unless the underlying security is covered by flood insurance for the term of the loan.  Further, the amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property securing the loan.

FLOOD 339.3(c)

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.3(c), requires that, effective July 1, 2019, an institution must accept private flood insurance, as defined in § 339.2, in satisfaction of the flood insurance purchase requirement in § 339.3(a) if the policy meets the coverage requirements in § 339.3(a).  The institution may accept a policy that is not issued under the NFIP and that does not meet the definition of private flood insurance if the policy meets the requirements under § 339.3(c)(3)(i) through (c)(3)(iv).  Additionally, the institution may accept a plan issued by a mutual aid society, as defined in

§ 339.2, if the plan meets the requirements under § 339.3(c)(4)(i) through (c)(4)((iv).

FLOOD 339.5(a)

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.5(a), requires an FDIC-supervised institution, or a servicer acting on its behalf, to require the escrow of all premiums and fees for any flood insurance required under § 339.3(a) for any designated loan secured by residential improved real estate or a mobile home that is made, increased, extended, or renewed on or after January 1, 2016, except as provided by § 339.5(a)(2) or 339.5(c).

If, at any time during the term of a designated loan, it is determined that an exception under § 339.5(a)(2) does not apply, then the FDIC-supervised institution or its servicer must require the escrow of all premiums and fees for any flood insurance required under § 339.3(a) as soon as reasonably practicable.  The flood insurance premiums and fees are required to be deposited in an escrow account on behalf of the borrower.  This escrow account will be subject to escrow requirements adopted pursuant to § 10 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. § 2609). Following receipt of a notice from the Administrator of FEMA or other provider of flood insurance that premiums are due, the FDIC-supervised institution, or servicer acting on its behalf, must pay the amount owed to the insurance provider from the escrow account by the premium due date.

FLOOD 339.5(b)

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.5(b), requires an FDIC-supervised institution, or servicer acting on its behalf, to mail or deliver a written notice that informs the borrower that the FDIC-supervised institution is required to escrow all premiums and fees for required flood insurance.  The notice must be provided for all loans for which an FDIC-supervised institution is required to escrow under § 339.5(a), or 339.5(c)(2), or may be required to escrow under § 339.5(a)(3), and must be provided with the notice required under § 339.9, using language that is substantially similar to model clauses on the escrow requirement in Appendix A of part 339.

FLOOD 339.5(c)(2)          

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.5(c)(2), requires an FDIC-supervised institution that previously qualified for the exception in § 339.5(c)(1), but no longer qualifies because it had assets of $1 billion or more for two consecutive calendar year ends, to escrow premiums and fees for flood insurance pursuant to § 339.5(a) for any designated loan made, increased, extended, or renewed on or after July 1 of the first calendar year of changed status.

FLOOD 339.5(d)

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.5(d), requires an FDIC-supervised institution, or a servicer acting on its behalf, to offer and make available to the borrower the option to escrow all premiums and fees for any flood insurance required under § 339.3 for any loan secured by residential improved real estate or a mobile home that is outstanding on January 1, 2016, or July 1 of the first calendar year in which the FDIC-supervised institution has had a change in status pursuant to § 339.5(c)(2), unless the loan or FDIC-supervised institution qualifies for an exception from the escrow requirement under § 339.5(d)(1).

Further, an FDIC-supervised institution, or servicer acting on its behalf, is required to mail or deliver to the borrower no later than June 30, 2016, or September 30 of the first calendar year in which the institution has had a change in status pursuant to § 339.5(c)(2), a notice in writing, or electronically if agreed to by the borrower, informing the borrower of the option to escrow all premiums and fees for any required flood insurance and the methods by which the borrower may request the escrow.  Such notice must be provided for any loan subject to § 339.5(d), using language similar to the model clause in Appendix B of part 339. An FDIC-supervised institution or servicer is required to begin escrowing premiums and fees for flood insurance as soon as reasonably practicable after receipt of the borrower's request to escrow.

FLOOD 339.6     

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.6, requires an FDIC-supervised institution to use the standard flood hazard determination form developed by the Administrator of FEMA when determining whether the building or mobile home offered as collateral for a loan is or will be located in a special flood hazard area in which flood insurance is available.  Further, the FDIC-supervised institution is required to retain a copy of the completed standard flood hazard determination form, in either hard copy or electronic form, for the period of time the institution owns the loan.

FLOOD 339.7(a) FP-NOTICE

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.7(a), requires an FDIC-supervised institution, or a servicer acting on its behalf, that determines at any time during the term of a designated loan that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required by § 339.3, to notify the borrower to obtain flood insurance, at the borrower's expense, in an amount at least equal to the amount required under §339.3 for the remaining term of the loan.

FLOOD 339.7(a) FP-INSURANCE

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.7(a), requires an FDIC-supervised institution, or a servicer acting on its behalf, to purchase insurance on the borrower's behalf if the borrower fails to obtain flood insurance within 45 days after the FDIC-supervised institution or its servicer notifies the borrower of the need to obtain flood insurance, at the borrower's expense, in an amount at least equal to the amount required under §339.3 for the remaining term of the loan.  The FDIC-supervised institution or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance, including premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount.

FLOOD 339.7(b)(1)          

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.7(b)(1), requires that within 30 days of receipt of a confirmation of a borrower’s existing flood insurance coverage, an FDIC-supervised institution or its servicer must: (i) notify the insurance provider to terminate any insurance purchased by the institution or its servicer under § 339.7(a); and (ii) refund to the borrower all premiums and any related fees paid by the borrower for any insurance purchased by the institution or its servicer under § 339.7(a) during any period during which the borrower's flood insurance coverage and the insurance coverage purchased by the institution or its servicer were each in effect.

FLOOD 339.8    

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.8, allows an FDIC-supervised institution or a servicer acting on its behalf, to charge a reasonable fee for determining whether the building or mobile home securing the loan is located or will be located in a special flood hazard area, if the determination meets one of the conditions under § 339.8(b)(1) through (b)(4).

FLOOD 339.9     

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.9, requires an FDIC-supervised institution to furnish a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan, when making, increasing, extending, or renewing a loan secured by a building or mobile home located or to be located in a designated special flood hazard area.  The written notice must include the information detailed in § 339.9(b)(1) through (b)(6); follow the timing of, record of receipt for, and the alternative methods of providing the notice as provided in 339.9(c) through (e).  A financial institution will be considered in compliance with the requirement for notice to the borrower under this section by providing a written notice containing the language presented in Appendix A.

FLOOD 339.10 

The Flood Disaster Protection Act of 1973 (42 U.S.C. §§ 4001-4129), as implemented by part 339 of the FDIC Rules and Regulations, 12 C.F.R. § 339.10, requires an FDIC-supervised institution to notify the Administrator of FEMA or designee in writing of the identity of the servicer of the loan, when the institution makes, increases, extends, renews, sells, or transfers a loan secured by a building or mobile home located or to be located in a special flood hazard area.  Further, the institution is required to notify the Administrator of FEMA or designee of any change in the servicer of a loan described in this section, within 60 days after the effective date of change.

Garnishment of Accounts Containing Federal Benefits

GARNISHMNT 212.4     

The Garnishment of Accounts Containing Federal Benefit Payments rule, 31 C.F.R. § 212.4, requires a financial institution, prior to taking any other action related to a garnishment order issued against a debtor, and no later than two business days following receipt of the order, to examine the order to determine if the United States or a State child support enforcement agency has attached or included a Notice of Right to Garnish Federal Benefits, as set forth in Appendix B to this part.  If the Notice of Right to Garnish Federal Benefits is attached or included, then the financial institution must follow its otherwise customary procedures for handling the order, and if the Notice of Right to Garnish Federal Benefits is not attached or included, then the financial institution must follow the procedures in §§ 212.5 and 212.6.

GARNISHMNT 212.5     

The Garnishment of Accounts Containing Federal Benefit Payments rule, 31 C.F.R. § 212.5, requires a financial institution to perform an account review when it is served a garnishment order issued against a debtor within the timeframes prescribed by § 212.5(a)(1) and (a)(2).  The financial institution must then follow procedures in § 212.6 if the benefit payment was deposited during the lookback period as noted under § 212.5(c).  If the benefit payment was not deposited during that period, the financial institution must follow its otherwise customary procedures.  The financial institution must perform an account review according to the requirements of § 212.5(d) through (f) without consideration for any other attributes of the account or the garnishment order, including but not limited to § 212.5(d)(1) through (d)(6).  The financial institution must perform the account review prior to taking any other actions related to the garnishment order that may affect funds in the account, and, perform the review separately for each account in the name of an account holder.

GARNISHMNT 212.6

The Garnishment of Accounts Containing Federal Benefit Payments rule, 31 C.F.R. § 212.6, requires a financial institution to adhere to the rules and procedures prescribed in § 212.6(a) through (h) if an account review shows that a benefit agency deposited a benefit payment into an account during the lookback period.

GARNISHMNT 212.7     

The Garnishment of Accounts Containing Federal Benefit Payments rule, 31 C.F.R. § 212.7, requires a financial institution to issue the notice to account holder, as required by § 212.6(e), in cases where a benefit agency deposited a benefit payment into an account during the lookback period, where the balance in the account on the date of account review was above zero dollars and the bank established a protected amount, and where there are funds in the account in excess of the protected amount.  In addition, the financial institution must follow the content, delivery, and timing requirements under § 212.7(b), (e), and (f) when providing the notice to the account holder named in the garnishment order.

GARNISHMNT 212.11(b)              

The Garnishment of Accounts Containing Federal Benefit Payments rule, 31 C.F.R. § 212.11(b), requires a financial institution to maintain records of account activity and actions taken in response to a garnishment order, sufficient to demonstrate compliance, for a period of not less than two years from the date on which the financial institution receives the garnishment order.

Home Mortgage Disclosure Act/Regulation C – Data Reported Beginning in 2018

HMDA 1003.4(a)

The Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.), as implemented by Regulation C, 12 C.F.R. § 1003.4(a), requires a nonexempt financial institution to collect data regarding applications for covered loans received, originated, and purchased for each calendar year.  An institution shall collect data regarding requests under a preapproval program, as defined in § 1003.2(b)(2), only if the preapproval request is denied, approved but not accepted, or results in the origination of a home purchase loan.  The data collected must include all the information listed in § 1003.4(a)(1) through (a)(38).

HMDA 1003.4(b)              

The Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.), as implemented by Regulation C, 12 C.F.R. § 1003.4(b), requires financial institutions to collect data about the ethnicity, race, and sex of the applicant or borrower in the manner provided in Appendix B to Regulation C.

HMDA 1003.4(e)

The Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.), as implemented by Regulation C, 12 C.F.R. § 1003.4(e), requires nonexempt banks and savings associations that are required to report data on small business, small farm, and community development lending under the Community Reinvestment Act to also collect the information required by § 1003.4(a)(9)(ii) for property located outside Metropolitan Statistical Areas and Metropolitan Divisions in which the institution has a home or branch office, or outside any Metropolitan Statistical Area.

HMDA 1003.4(f)

The Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.), as implemented by Regulation C, 12 C.F.R. § 1003.4(f), requires a financial institution to record the data collected pursuant to this section on a loan/application register within 30 calendar days after the end of the calendar quarter in which final action is taken.

HMDA 1003.5(a)

The Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.), as implemented by Regulation C, 12 C.F.R. § 1003.5(a), requires a nonexempt financial institution to send its complete loan/application register in an electronic format to the appropriate Federal agency, as defined by § 1003.5(a)(4), by March 1 following the calendar year for which the loan data are compiled.  A nonexempt subsidiary of a bank or savings association must complete a separate loan/application register, which it must submit, directly or through its parent, to the appropriate Federal agency for the subsidiary's parent by March 1 following the calendar year for which the loan data are compiled.  This annual submission must include the information specified in § 1003.5(a)(3)(i) through (a)(3)(vii) and must be certified as accurate and complete by an authorized representative of the financial institution with knowledge of the data.  The institution shall retain a copy of its loan/application register for at least three years.  Procedures for the submission of data are available at www.consumerfinance.gov/hmda.

HMDA 1003.5(b)(2)-(d)

The Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.), as implemented by Regulation C, 12 C.F.R. § 1003.5(b)(2) through (d), requires a financial institution to provide a written notice that clearly conveys that the institution's HMDA disclosure statement and modified loan/application register may be obtained on the CFPB's Web site at www.consumerfinance.gov/hmda.  These notices must be made available to the public during normal business hours, upon request, at the institution's home office, and each branch office, physically located in each Metropolitan Statistical Area and each Metropolitan Division.  The notice regarding the institution's HMDA disclosure statement must be made available no later than three business days after receiving notice from the FFIEC that the disclosure statement is available and must be available to the public for a period of five years.  The notice related to the institution's modified loan/application register must be made available during the calendar year following the year for which the data was collected and must be made available to the public for a period of three years.

HMDA 1003.5(e)

The Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.), as implemented by Regulation C, 12 C.F.R. § 1003.5(e), requires a financial institution to post a general notice about the availability of its HMDA data in the lobby of its home office and of each branch office physically located in each Metropolitan Statistical Area and each Metropolitan Division.  This notice must clearly convey that the institution's HMDA data is available on the CFPB's Web site at www.consumerfinance.gov/hmda.

Homeowners Protection Act

HPA 3(a)-(g)       

Section 3 of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4902(a)-(g)), requires a mortgage servicer to cancel private mortgage insurance (PMI) when the borrower submits a request in writing to the servicer, has a good payment history, is current on payments, and meets certain previously established qualifications.  Additionally, the servicer is required to terminate PMI on the earliest date that both: (1) the mortgage principal is scheduled to reach 78% of the original value of the secured property; and (2) the borrower is current on mortgage payments.

For high-risk non-conforming loans, the servicer is required to terminate borrower-paid PMI when the mortgage principal is scheduled to reach 77% of the original value of the secured property.  This section also prohibits the servicer from requiring PMI beyond the first day of the month immediately following the date that is the midpoint of the loan’s amortization period if the loan payments are current, and prohibits additional payments or premiums for PMI 30 days after the insurance is cancelled or terminated.

The servicer must return all unearned PMI premiums to the borrower within 45 days after canceling or terminating PMI coverage.  Further, if there is a modification of the terms or conditions of a loan, the cancellation date, termination date, or final termination date must be recalculated to reflect the modified terms and conditions.

HPA 4(a)(1)-(2) 

Section 4(a)(1) and (2) of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4903(a)(1)-(2)), requires initial disclosures in writing at the time of consummation for non-exempt residential mortgage transactions that will require private mortgage insurance.  Specific information is required on the initial disclosures for fixed rate and adjustable rate residential mortgage transactions, as detailed in § 4903(a)(1)(A) and § 4903(a)(1)(B), respectively, detailing the borrower’s rights to cancel this private mortgage insurance.  Further, at the time the transaction is consummated, a written notice must be provided for high-risk residential mortgage transactions that states private mortgage insurance will not be required beyond the midpoint of the loan’s amortization schedule, if the loan payments are current on that date.

HPA 4(a)(3)        

Section 4(a)(3) of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4903(a)(3)), requires annual written statements for residential mortgage transactions that require private mortgage insurance (PMI).  The annual statement must set forth the borrower's rights to cancellation or termination of the PMI and must identify the servicer’s mailing address and telephone number so the borrower may contact the server to determine if the borrower may cancel the PMI.

HPA 5(a)             

Section 5(a) of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4904(a)), requires the servicer to notify the borrower in writing not later than 30 days after the private mortgage insurance (PMI) is cancelled or terminated.  The notice shall disclose that the PMI has terminated and the borrower no longer has PMI, and that no further premiums, payments, or other fees are due or payable by the borrower in connection with the PMI.

HPA 5(b)(1)-(2) 

Section 5(b)(1) and (2) of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4904(b)(1) and (2)), requires the servicer to provide a written notice to the borrower if a mortgage servicer determines that a mortgage will not qualify for cancellation or termination of private mortgage insurance. The notice shall disclose the grounds on which the determination was made.  If an appraisal was used, the servicer must give the results of the appraisal to the borrower.

With respect to the denial of a requested cancellation, the notice required under this section must be provided not later than 30 days following the later of: (1) the date the borrower's request for cancellation is received; or (2) the date on which the borrower satisfies any evidence or certification requirements.  If the requirements of an automatic termination are not met, the notice is due not later than 30 days after the scheduled termination date.

HPA 6(c)(1)        

Section 6(c)(1) of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4905(c)(1)), requires, in a residential mortgage transaction involving lender-paid mortgage insurance, that the written notice containing information specified under this section be provided not later than the date of the loan commitment.  The written notice provided to the borrower must explain certain unique features of lender-paid mortgage insurance, including how this type of insurance differs from borrower-paid mortgage insurance, a generic analysis of the advantages and disadvantages of each type of mortgage insurance over a 10-year period assuming prevailing interest and property appreciation rates, and the potential Federal tax implications of lender-paid mortgage insurance.

HPA 6(c)(2)        

Section 6(c)(2) of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4905(c)(2)), requires, in a residential mortgage transaction involving lender-paid mortgage insurance, that a written notice be provided to the borrower not later than 30 days after the termination date that would apply in the case of borrower paid mortgage insurance.  The notice must indicate that the borrower may wish to review financing options that could eliminate the requirement for private mortgage insurance.

HPA 7(No Subsection)     

Section 7 of the Homeowner’s Protection Act of 1998 (12 U.S.C. § 4906), prohibits the imposition of fees or other costs on any borrower with respect to any disclosure or notification requirements of this chapter.

Homeownership Counseling Act

HCA 106(c)(5)     

Section 106(c)(5) of the Housing and Urban Development Act of 1968 (12 U.S.C. § 1701x(c)(5)), requires a creditor of a loan to notify any eligible homeowner who fails to pay any amount by the due date of the availability of homeownership counseling.  Such notification must be provided within 45 days of delinquency and in a manner approved by the Secretary of Housing and Urban Development.  Additionally, prospective creditors must provide such a notice to any applicant for a mortgage described in section 106(c)(4) (12 U.S.C. § 1701x(c)(4)).  These notices must comply with the requirements in § 106(c)(5)(A)(ii)(I) through (c)(5)(A)(ii)(V) (12 U.S.C. § 1701x(c)(5)(A)(ii)(I) through (V)).

Such requirements include, but are not limited to:

(a) notifying the homeowner or applicant of any homeownership counseling offered by the creditor or prospective creditor;

(b) notifying the homeowner or prospective applicant of homeownership counseling offered by nonprofit organizations or provide a toll-free number where this information can be obtained; and

(c) notifying the homeowner by a statement or notice, written in plain English by the Secretary of Housing and Urban Development, explaining the mortgage and foreclosure rights of servicemembers, and the dependents of such servicemembers, under the Servicemembers Civil Relief Act (50 U.S.C. § 3901 et seq.), including the toll-free military one source number to call if servicemembers, or their dependents, require further assistance.

Military Lending Act

MLA 232.4(a)    

The Military Lending Act (10 U.S.C. § 987), as implemented by part 232 of the Department of Defense regulations, 32 C.F.R. § 232.4(a), prohibits a creditor from imposing a Military Annual Percentage Rate except as:

1) agreed to under the terms of the credit agreement or promissory note;

2) authorized by applicable State or Federal law; and

3) not specifically prohibited by this part.

MLA 232.4(b)     

The Military Lending Act (10 U.S.C. § 987), as implemented by part 232 of the Department of Defense regulations, 32 C.F.R. § 232.4(b), prohibits a creditor from imposing a Military Annual Percentage Rate greater than 36 percent in connection with a covered extension of consumer credit that is closed-end credit or in any billing cycle for open-end credit.

MLA 232.4(c)      

The Military Lending Act (10 U.S.C. § 987), as implemented by part 232 of the Department of Defense regulations, 32 C.F.R. § 232.4(c), requires a creditor to calculate the Military Annual Percentage Rate for covered closed-end and open-end credit transactions as specified under by § 232.4(c)(1) through (c)(2).

MLA 232.5(b)(2)(B)         

The Military Lending Act (10 U.S.C. § 987), as implemented by part 232 of the Department of Defense regulations, 32 C.F.R. § 232.5(b)(2)(B), prohibits a creditor or an assignee from, directly or indirectly, obtaining any information from any database maintained by the Department of Defense, at any time after a consumer has entered into a transaction or established an account involving an extension of credit, to ascertain whether a consumer had been a covered borrower as of the date of that transaction or as of the date that account was established.

MLA 232.6         

The Military Lending Act (10 U.S.C. § 987), as implemented by part 232 of the Department of Defense regulations, 32 C.F.R. § 232.6, requires a creditor to provide disclosures, as specified in § 232.6(a)(1) through (a)(3), to a covered borrower before or at the time the borrower becomes obligated on the extension of consumer credit, including any consumer credit originated or extended through the internet, or establishes an account for the consumer credit.  The disclosures must be provided in writing in a form that the covered borrower can keep and must also be provided orally as specified in § 232.6(d)(2)(ii) and (d)(2)(iii).

MLA 232.8         

The Military Lending Act (10 U.S.C. § 987), as implemented by part 232 of the Department of Defense regulations, 32 C.F.R. § 232.8, prohibits a creditor from extending consumer credit to a covered borrower with certain terms or features or under the circumstances described in § 232.8(a) through (h).  Among other requirements, this section prohibits creditors from:

(1) rolling over, renewing, refinancing, or consolidating any consumer credit extended to the covered borrower by the same creditor with the proceeds of other consumer credit;

(2) requiring a covered borrower to waive the covered borrower’s right to legal recourse under any State or Federal law, including any provision of the Servicemembers Civil Relief Act;

(3) requiring a covered borrower to submit to arbitration;

(4) requiring as a condition for the extension of credit that the covered borrower establish an allotment to repay the obligation; or

(5)  prohibiting a covered borrower from prepaying the consumer credit or charging a prepayment penalty for prepaying all or part of the obligation.

Non Deposit Products - Custodial Holdings of Government Securities by Depository Institutions

NDP-GOV-SC 450.4(a)   

The Securities Exchange Act of 1934 (15 U.S.C. § 78o-5(b)(1)(A), (b)(4), (b)(5)(B)), as implemented by the Custodial Holdings of Government Securities by Depository Institutions rule, 17 C.F.R. § 450.4(a), requires a financial institution to observe the requirements outlined in § 450.4(a)(1) through (a)(6) with respect to its holdings of government securities for customer accounts.

NDP-GOV-SC 450.4(b)(1)              

The Securities Exchange Act of 1934 (15 U.S.C. § 78o-5(b)(1)(A), (b)(4), (b)(5)(B)), as implemented by the Custodial Holdings of Government Securities by Depository Institutions rule, 17 C.F.R. § 450.4(b)(1), requires a financial institution to issue a confirmation or a safekeeping receipt containing specific information for each security held for a customer according to § 450.4(b)(1), except as provided by § 450.4(b)(2).

NDP-GOV-SC 450.4(c)   

The Securities Exchange Act of 1934 (15 U.S.C. § 78o-5(b)(1)(A), (b)(4), (b)(5)(B)), as implemented by the Custodial Holdings of Government Securities by Depository Institutions rule, 17 C.F.R. § 450.4(c), requires a financial institution to maintain records of government securities held for customers, keep such records separate and distinct from other records, and meet requirements of § 450.4(c)(1) through (c)(5).

NDP-GOV-SC 450.4(d)   

The Securities Exchange Act of 1934 (15 U.S.C. § 78o-5(b)(1)(A), (b)(4), (b)(5)(B)), as implemented by the Custodial Holdings of Government Securities by Depository Institutions rule, 17 C.F.R. § 450.4(d), requires a financial institution to conduct counts of government securities held for customers in both definitive and book-entry form at least annually and to reconcile such counts with customer account records, according to the requirements of § 450.4(d)(1) through (d)(3).

NDP-GOV-SC 450.4(e)   

The Securities Exchange Act of 1934 (15 U.S.C. § 78o-5(b)(1)(A), (b)(4), (b)(5)(B)), as implemented by the Custodial Holdings of Government Securities by Depository Institutions rule, 17 C.F.R. § 450.4(e), requires a financial institution to treat a government securities broker or dealer as a customer with respect to securities by such government securities broker or dealer in a Segregated Account as defined in § 403.4(f)(1) and separate from other securities held for the account of the government securities broker or dealer.

NDP-GOV-SC 450.4(f)     

The Securities Exchange Act of 1934 (15 U.S.C. § 78o-5(b)(1)(A), (b)(4), (b)(5)(B)), as implemented by the Custodial Holdings of Government Securities by Depository Institutions rule, 17 C.F.R. § 450.4(f), requires a financial institution to preserve the records required by § 450.4(c) and (d)(3) for not less than six years with the first two years being in an easily accessible place.

Non-Deposit Products - Broker/Dealer Rules & Exemptions - Regulation R

NDP-REG-R 3(a)(4)

Section 3(a)(4) of the Securities and Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(B)(i)-(xi)), prohibits a bank from conducting securities transactions without registering with the Securities and Exchange Commission unless such activities meet certain conditions described in the enumerated exceptions in § 3(a)(4)(B)(i) through (a)(4)(B)(xi).

NDP-REG-R 218.701(a) 

The Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(F)), as implemented by Regulation R, 12 C.F.R. § 218.701(a), prohibits a financial institution from paying a referral fee to a financial institution employee for referring a high net worth customer or institutional customer to a broker or dealer with which the financial institution has a contractual or other written agreement pursuant to § 3(a)(4)(B)(i) of the Act, unless the financial institution is a registered broker/dealer or falls under one of the enumerated exceptions under 12 C.F.R. § 218.700, and meets the requirements of § 218.701(a)(1) through (a)(3).

NDP-REG-R 218.701(b) 

The Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(F)), as implemented by Regulation R, 12 C.F.R. § 218.701(b), requires a financial institution that provides the disclosure pursuant to § 218.701(a)(2)(i) or (a)(3)(i) to disclose, clearly and conspicuously the name of the broker or dealer, and that the bank employee participates in an incentive compensation program under which the bank employee may receive a fee of more than a nominal amount for referring the customer to the broker or dealer and that payment of this fee may be contingent on whether the referral results in a transaction with the broker or dealer.   

NDP-REG-R 218.741(a)

The Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(F)), as implemented by Regulation R, 12 C.F.R. § 218.741(a), prohibits a financial institution from engaging in transactions on behalf of a customer in securities issued by money market funds unless the financial institution is a registered broker/dealer or meets the conditions under § 218.741(a)(1)-(2).

Non-Deposit Products - Consumer Protection in Sales of Insurance

NDP-INS 343.30(a)-(c)

The Federal Deposit Insurance Act (12 U.S.C §§ 1819(a)(Seventh), 1819(a)(Tenth), and 1831x), as implemented by the Consumer Protection in Sales of Insurance rule, 12 C.F.R. § 343.30(a) through (c), prohibits the financial institution from: engaging in any practice that would lead a consumer to believe that an extension of credit is conditional upon the purchase of an insurance product or annuity from the institution or any of its affiliates, or an agreement by the consumer not to obtain, or a prohibition on the consumer from obtaining, an insurance product or annuity from an unaffiliated entity; engaging in any misleading practice or advertisement with respect to the sale of insurance products, as specified by the items enumerated in § 343.30(b)(1) through (b)(3); and discriminating in the sale of insurance products based on the applicant or insured being a victim of domestic violence, as prohibited by § 343.30(c).

NDP-INS 343.40(a)          

The Federal Deposit Insurance Act (12 U.S.C §§ 1819(a)(Seventh), 1819(a)(Tenth), and 1831x), as implemented by the Consumer Protection in Sales of Insurance rule, 12 C.F.R. § 343.40(a), requires the financial institution, with the initial purchase of an insurance product or annuity by a consumer, to disclose to the consumer, except to the extent the disclosure would not be accurate, that the insurance product or annuity is not a deposit or other obligation of, or guaranteed by the institution or an affiliate of the institution; the insurance product or annuity is not insured by the FDIC or any other agency of the United States, the institution, or an affiliate of the institution; and in the case of an insurance product or annuity that involves an investment risk, that there is investment risk associated with the product, including the possible loss of value.

NDP-INS 343.40(b)          

The Federal Deposit Insurance Act (12 U.S.C §§ 1819(a)(Seventh), 1819(a)(Tenth), and 1831x), as implemented by the Consumer Protection in Sales of Insurance rule, 12 C.F.R. § 343.40(b), requires the financial institution, in the case of an application for credit in connection with which an insurance product or annuity is solicited, offered, or sold, to disclose that the institution may not condition an extension of credit on either the consumer’s purchase of an insurance product or annuity from the institution or any of its affiliates or the consumer’s agreement not to obtain, or a prohibition on the consumer from obtaining an insurance product or annuity from an unaffiliated entity.

NDP-INS 343.40(c)          

The Federal Deposit Insurance Act (12 U.S.C §§ 1819(a)(Seventh), 1819(a)(Tenth), and 1831x), as implemented by the Consumer Protection in Sales of Insurance rule, 12 C.F.R. § 343.40(c), requires the financial institution to provide the disclosures required by § 343.40(a) orally and in writing before the completion of the initial sale of an insurance product or annuity; and the disclosures required by § 343.40(b) be provided orally and in writing at the time the consumer applies for an extension of credit with which an insurance product or annuity is solicited, offered, or sold, except pursuant to § 343.40(c)(2) and (c)(3).  The disclosures required by § 343.40(a) and (b) may also be provided electronically instead of on paper if the consumer affirmatively consents to receiving electronic disclosures and the disclosures are provided in a format that a consumer may retain or obtain later.  If the disclosure is provided by electronic media, then oral disclosure is not required.  In addition, the disclosures required by this section must be meaningful, conspicuous, simple, direct, readily understandable, designed to call attention to the nature and significance of the information provided, and meaningful as prescribed by § 343.40(c)(5) and (c)(6).  The bank must also obtain consumer acknowledgment as outlined in § 343.40(c)(7).

NDP-INS 343.40(d)          

The Federal Deposit Insurance Act (12 U.S.C §§ 1819(a)(Seventh), 1819(a)(Tenth), and 1831x), as implemented by the Consumer Protection in Sales of Insurance rule, 12 C.F.R. § 343.40(d), requires the disclosures described in § 343.40(a) be in advertisements and promotional materials for insurance products or annuities unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the institution.

NDP-INS 343.50(a)-(b)   

The Federal Deposit Insurance Act (12 U.S.C §§ 1819(a)(Seventh), 1819(a)(Tenth), and 1831x), as implemented by the Consumer Protection in Sales of Insurance rule, 12 C.F.R. § 343.50(a) and (b), requires: (1) a financial institution, to the extent practicable, keep the area where the institution conducts transactions involving insurance products or annuities physically segregated from areas where retail deposits are routinely accepted from the general public, identify the areas where insurance product or annuity sales activities occur, and clearly delineate and distinguish those areas where the institution’s retail deposit-taking activities occur; and (2) that any person who accepts deposits from the public in an area where such transactions are routinely conducted in the institution, may refer a consumer who seeks to purchase an insurance product or annuity to a qualified person who sells that product only if the person making the referral receives no more than a one-time, nominal fee of a fixed dollar amount for each referral that does not depend on whether the referral results in a transaction.

NDP-INS 343.60

The Federal Deposit Insurance Act (12 U.S.C §§ 1819(a)(Seventh), 1819(a)(Tenth), and 1831x), as implemented by the Consumer Protection in Sales of Insurance rule, 12 C.F.R. § 343.60, prohibits a financial institution from permitting any person to sell or offer for sale any insurance product or annuity in any part of its office or on its behalf, unless the person is at all times appropriately qualified and licensed under applicable State insurance licensing standards with regard to the specific products being sold or recommended.

Non-Deposit Products - Protection of Customer Securities and Balances

NDP-SEC-BL 403.5(c)(1)-(2)         

The Securities Exchange Act of 1934 (15 U.S.C § 78o-5(a)(5), (b)(1)(A), (b)(4)), as implemented by the Protection of Customer Securities and Balances rule, 17 C.F.R. § 403.5(c)(1) and (c)(2), requires a financial institution to:

(1) determine the quantity and issue of securities on each business day that are required to be, but are not, in the financial institution’s possession or control and, as appropriate, bring such securities into possession or control, by: (i) promptly obtaining the release of any lien, charge, or other encumbrance against the securities; (ii) promptly obtaining the return of any securities loaned; (iii) promptly taking steps to obtain possession or control of securities failed to be received for more than 30 calendar days, or in the case of mortgage-backed securities, for more than 60 calendar days; or (iv) promptly taking steps to buy securities as necessary to the extent of any shortage of securities in possession or control that cannot be resolved as required by the above procedures; and

(2) prepare and maintain a current and detailed description of the procedures and internal controls that the financial institution utilizes to comply with the possession or control requirements of § 403.5(c), which must be made available upon request to the financial institution’s appropriate regulatory agency.

NDP-SEC-BL 403.5(d)(1)

The Securities Exchange Act of 1934 (15 U.S.C § 78o-5(a)(5), (b)(1)(A), (b)(4)), as implemented by the Protection of Customer Securities and Balances rule, 17 C.F.R. § 403.5(d)(1), requires a financial institution that retains custody of securities that are the subject of a repurchase agreement between the financial institution and a counterparty to:

(i) obtain the repurchase agreement in writing;

(ii) confirm in writing the specific securities that are the subject of a repurchase transaction;

(iii) advise the counterparty that the funds held by the financial institution pursuant to a repurchase transaction are not a deposit and not insured by the FDIC;

(iv) if the counterparty agrees to grant the financial institution the right to substitute securities, include in the written repurchase agreement the provision by which the financial institution retains the right to substitute securities;

(v) if the counterparty agrees to grant the financial institution the right to substitute securities, include the required disclosure statement, which must be prominently displayed in the written repurchase agreement immediately preceding the provision governing the right to substitution; and,

(vi) maintain possession or control of securities that are the subject of the agreement in accordance with § 450.4(a), except when exercising its right of substitution in accordance with the provisions of the agreement and § 403.5(d)(1)(iv).

NDP-SEC-BL 403.5(d)(2)(i)           

The Securities Exchange Act of 1934 (15 U.S.C § 78o-5(a)(5), (b)(1)(A), (b)(4)), as implemented by the Protection of Customer Securities and Balances rule, 17 C.F.R. § 403.5(d)(2)(i), requires a financial institution which retains custody of securities that are the subject of a repurchase agreement between the financial institution and a counterparty to include the required information in the confirmation, unless the institution is subject to the exceptions set forth in § 403.5(d)(3).

Non-Deposit Products - Recordkeeping and Confirmation Requirements for Securities Transactions

NDP-RECORD 344.2(b) 

The Federal Deposit Insurance Act (12 U.S.C. §§ 1817, 1818, and 1819(a)(Tenth)) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 5412), as implemented by the Recordkeeping and Confirmation Requirements for Securities Transactions rule, 12 C.F.R. § 344.2(b), requires FDIC-supervised institutions effecting securities transactions for customers to maintain, directly or indirectly, effective systems of records and controls regarding their customer securities transactions to ensure safe and sound operations.  In addition, the records and systems maintained must reflect clearly and accurately the information required under Part 344 and provide an adequate basis for an audit.

NDP-RECORD 344.4       

The Federal Deposit Insurance Act (12 U.S.C. §§ 1817, 1818, and 1819(a)(Tenth)) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 5412), as implemented by the Recordkeeping and Confirmation Requirements for Securities Transactions rule, 12 C.F.R. § 344.4, requires FDIC-supervised institutions effecting securities transactions for customers to maintain the following records for at least three years: chronological records; account records; order tickets; records of broker/dealer; and notifications, as prescribed by § 344.(a)(1) through (a)(5).

NDP-RECORD 344.5      

The Federal Deposit Insurance Act (12 U.S.C. §§ 1817, 1818, and 1819(a)(Tenth)) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 5412), as implemented by the Recordkeeping and Confirmation Requirements for Securities Transactions rule, 12 C.F.R. § 344.5, requires FDIC-supervised institutions effecting securities transactions for customers to give or send, by mail, facsimile, or other means of electronic transmission, to the customer at or before completion of the transaction either a broker/dealer’s confirmation or a written notification, as prescribed by § 344.5(a) and (b).

NDP-RECORD 344.6      

The Federal Deposit Insurance Act (12 U.S.C. §§ 1817, 1818, and 1819(a)(Tenth)) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 5412), as implemented by the Recordkeeping and Confirmation Requirements for Securities Transactions rule, 12 C.F.R. § 344.6, requires an FDIC-supervised institution to use the alternative notification procedures, as prescribed by § 344.6(a) through (f), if the transaction is effected for: notification by agreement; trust accounts; agency accounts; cash management sweep accounts; collective investment fund accounts; and periodic plan accounts.

NDP-RECORD 344.7(a)

The Federal Deposit Insurance Act (12 U.S.C. §§ 1817, 1818, and 1819(a)(Tenth)) and the  Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 5412), as implemented by the Recordkeeping and Confirmation Requirements for Securities Transactions rule, 12 C.F.R. § 344.7(a), requires all contracts, except for those in § 344.7(b) or (c), effected or entered into by an FDIC-supervised institution that provide for the purchase or sale of a security (other than an exempted security as defined in 15 U.S.C. § 78c(a)(12), government or municipal security, commercial paper, bankers’ acceptances, or commercial bills), to provide for completion of the transaction within the number of business days in the standard settlement cycle followed by registered broker dealers in the United States, unless otherwise agreed to by the parties at the time of the transaction.

NDP-RECORD 344.8      

The Federal Deposit Insurance Act (12 U.S.C. §§ 1817, 1818, and 1819(a)(Tenth)) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 5412), as implemented by the Recordkeeping and Confirmation Requirements for Securities Transactions rule, 12 C.F.R. § 344.8, requires an FDIC-supervised institution effecting securities transactions for customers to establish written policies and procedures, as prescribed by § 344.8(a)(1) through (a)(4).

NDP-RECORD 344.9(a) 

The Federal Deposit Insurance Act (12 U.S.C. §§ 1817, 1818, and 1819(a)(Tenth)) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. § 5412), as implemented by the Recordkeeping and Confirmation Requirements for Securities Transactions rule, 12 C.F.R § 344.9(a), requires FDIC-supervised institution officers and employees who make investment recommendations or decisions for the accounts of customers; participate in the determination of such recommendations or decisions; or in connection with their duties, obtain information concerning which securities are being purchased or sold or recommend such action, report to the FDIC-supervised institution within 30 calendar days after the end of the calendar quarter, all transactions in securities made by them or on their behalf in which they have a beneficial interest.  The report must identify the securities purchased or sold, the dates of the transactions, and whether the transactions were purchases or sales, except as provided by § 344.9(b).

OTHER-LAWS

OTHER-LAWS Uncoded-Uncoded

For use with uncoded violations.  Insert relevant regulatory citation information.

Preservation of Consumers' Claims and Defenses

PCCD 433.2

The Preservation of Consumers’ Claims and Defenses rule (Holder-in-Due-Course Rule), 16 C.F.R. § 433.2, prohibits a financial institution, in connection with any sale or lease of goods or services to consumers, from taking or receiving a consumer credit contract, or accepting, as full or partial payment for such sale or lease, the proceeds of any purchase money loans, unless the contract contains the required notice provisions in at least ten point, bold face, type.  Such violations are considered unfair and deceptive acts or practices under section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)).

Privacy of Consumer Financial Information/Regulation P

PRIVACY 1016.4

The Gramm-Leach-Bliley Act, Title V, Privacy (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.4(a), requires a financial institution to provide a clear and conspicuous initial notice that accurately reflects the financial institution’s privacy policies to customers and consumers.  The financial institution must provide the notice to a customer not later than when it establishes a customer relationship, except as provided by § 1016.4(e), and to a consumer before the financial institution discloses any nonpublic personal information about the consumer to any nonaffiliated third party, if the financial institution makes such a disclosure other than as authorized by §§ 1016.14 and 1016.15.  In addition, the financial institution must deliver the initial privacy notice in accordance with § 1016.9.

PRIVACY 1016.5             

The Gramm-Leach-Bliley Act, Title V, Privacy (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.5(a), requires a financial institution to provide a clear and conspicuous notice to customers, except as permitted by § 1016.9(e), that accurately reflects the financial institution’s privacy policies and practices not less than annually during the continuation of the customer relationship, and to deliver the notice in accordance with § 1016.9.

PRIVACY 1016.6             

The Gramm-Leach-Bliley Act, Title V, Privacy (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.6, requires a financial institution that provides the initial, annual, and revised privacy notices under §§ 1016.4, 1016.5, and 1016.8, to include the information outlined under § 1016.6(a)(1) through (a)(9).  In addition, the institution must meet the requirements of § 1016.6(b) through (e) regarding nonaffiliated third parties, categories of nonpublic personal information, the short-form initial notice with opt-out notice for non-customers, and future disclosures.

PRIVACY 1016.7             

The Gramm-Leach-Bliley Act, Title V, Privacy (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.7, requires a financial institution that provides an opt out notice under § 1016.10(a) to provide a clear and conspicuous notice to each of the financial institution’s consumers that accurately explains the right to opt out. The notice must state that the financial institution discloses or reserves the right to disclose nonpublic personal information about the consumer to a nonaffiliated third party; that the consumer has the right to opt out; and a reasonable means by which the consumer may exercise the opt out right.  In addition, the financial institution must provide an initial notice if it provides the opt out notice later than required in accordance with § 1016.4; an opt out notice explaining how the financial institution will treat an opt out direction by a joint consumer, if it chooses to issue such notices; allow consumers to exercise the right to opt out at any time; and deliver the opt out notice in accordance with § 1016.7(c), (d), (h), and (j).  This violation code presumes that the notice and opt-out exceptions set out at § 1016.14 and

§ 1016.15 do not apply.

PRIVACY 1016.8

The Gramm-Leach-Bliley Act, Title V, Privacy (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.8, prohibits a financial institution from disclosing directly, or through an affiliate, any nonpublic personal information about a consumer to a nonaffiliated party other than as described in the initial notice that the financial institution provided to that consumer under § 1016.4, unless the following requirements are met: the financial institution provided a clear and conspicuous revised notice that accurately described its policies and practices; the financial institution provided to the consumer a new opt out notice; the financial institution has given the consumer a reasonable opportunity before information is disclosed to the nonaffiliated third party to opt out of the disclosure; and the consumer does not opt out.  In addition, the institution must deliver a revised privacy notice in accordance with § 1016.9.

PRIVACY 1016.10(a)(1)

The Gramm-Leach-Bliley Act, Title V, Privacy, (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.10(a)(1), prohibits a financial institution from disclosing directly, or through an affiliate, any nonpublic personal information about a consumer to a nonaffiliated third party unless the following requirements are met: the financial institution provides to the consumer an initial notice as required by § 1016.4 and an opt out notice as required by § 1016.7; the financial institution gives the consumer a reasonable opportunity before disclosing the information to the nonaffiliated third party to opt out of the disclosure; and the consumer does not opt out.   

PRIVACY 1016.11          

The Gramm-Leach-Bliley Act, Title V, Privacy (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.11, requires the financial institution that received nonpublic personal information from a nonaffiliated financial institution under an exception in §§ 1016.14 or 1016.15, to limit the disclosure and use of that information in accordance with § 1016.11(a)(1)(i) through (iii).  The disclosure and use of nonpublic personal information received from a nonaffiliated financial institution outside an exception in §§ 1016.14 or 1016.15 must be in accordance with § 1016.11(b)(1)(i) through (iii). If the financial institution discloses nonpublic personal information to a nonaffiliated third party under or outside of an exception, the third party may disclose and use that information only as prescribed by § 1016.11(c) and (d), respectively.

PRIVACY 1016.12(a)     

The Gramm-Leach-Bliley Act, Title V, Privacy (15 U.S.C. § 6801 et seq.), as implemented by Regulation P, 12 C.F.R. § 1016.12(a), prohibits a financial institution, except as permitted in § 1016.12(b), from disclosing directly, or through an affiliate, other than to a consumer reporting agency, an account number or similar form of access number or access code for a consumer’s credit card account, deposit account, share account, or transaction account to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other marketing through electronic mail to the consumer.

Prohibition Against Use of Interstate Branches Primarily for Deposit Production

IBBEA 369(No Subsection)            

Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (12 U.S.C. § 1835a), as implemented by part 369 of the FDIC Rules and Regulations, 12 C.F.R. part 369, prohibits a bank from using any authority to engage in interstate branching pursuant to the Interstate Act, or any amendment made by the Interstate Act to any other provision of law, primarily for the purpose of deposit production.

Protecting Tenants at Foreclosure Act

PTFA 702(a)(1)

Section 702(a)(1) of the Protecting Tenants at Foreclosure Act of 2009 (12 U.S.C. § 5520 note), requires a financial institution to send a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice in the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property. The Act originally expired at the end of 2014, but was restored effective June 23, 2018.

PTFA 702(a)(2) 

Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009 (12 U.S.C. § 5520 note), requires a financial institution to honor the existing lease for renters until the end of the lease term in the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property under any bona fide lease.  An institution may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice required under § 702(a)(1).  The Act originally expired at the end of 2014, but was restored effective June 23, 2018.

Real Estate Settlement Procedures Act/Regulation X – Subpart B – Mortgage Settlement and Escrow Accounts

RESPA-B 1024.6

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.6, requires the lender to provide a copy of the special information booklet for applicable loans to at least one of the applicants, as set forth in, and subject to the exceptions outlined under, § 1024.6(a)(1) through (a)(3).  Unless specifically permitted in § 1024.6(b) through (d), no changes can be made to the special information booklet.

RESPA-B 1024.7(a)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.7(a), requires a lender to provide the applicant with a good faith estimate in accordance with the requirements of § 1024.7(a)(1) through (a)(5), except as otherwise provided in § 1024.7(a), (b), or (h).   

A violation of § 1024.7(a) also constitutes a violation of § 5 of RESPA (12 U.S.C. § 2604).

RESPA-B 1024.7(c)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.7(c), requires the estimate of the charges and terms for all settlement services, unless specifically excepted under § 1024.7(c), to be available for at least 10 business days from when the good faith estimate is provided.

A violation of § 1024.7(c) also constitutes a violation of § 5 of RESPA (12 U.S.C. § 2604).

RESPA-B 1024.7(d)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.7(d), requires the loan originator to prepare the good faith estimate in accordance with the requirements of § 1024.7 and the instructions set forth in Appendix C.

A violation of § 1024.7(d) also constitutes a violation of § 5 of RESPA (12 U.S.C. § 2604).

RESPA-B 1024.7(e)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.7(e), requires that, except as provided in § 1024.7(f), the charges at settlement be in accordance with the tolerance limits outlined under § 1024.7(e)(1) through (e)(3).

A violation of § 1024.7(e) also constitutes a violation of § 5 of RESPA (12 U.S.C. § 2604).  However, as specified in § 1024.7(i), any charges at settlement that exceed the charges listed on the good faith estimate by more than the permitted tolerances under § 1024.7(e) constitute a tolerance violation, which can be cured by the loan originator by reimbursing to the borrower, at settlement or within 30 calendar days after settlement, the amount by which the tolerance was exceeded.

RESPA-B 1024.7(f)          

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.7(f), requires a loan originator to be bound to the settlement charges and terms listed on the good faith estimate, within the tolerances provided in § 1024.7(e), unless a revised good faith estimate is provided prior to settlement, or the good faith estimate becomes invalid pursuant to any of the circumstances set forth in § 1024.7(f)(1) through (f)(6).  The loan originator must document and retain the reason for providing the revised good faith estimate for no less than 3 years after settlement.

RESPA-B 1024.8(a)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.8(a), requires the settlement agent to use the HUD-1 or HUD-1A, as appropriate, for every RESPA-covered transaction, unless its use is specifically exempted under § 1024.8(a).

A violation of § 1024.8(a) also constitutes a violation of § 4 of RESPA (12 U.S.C. § 2603).

RESPA-B 1024.8(b)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.8(b), requires the settlement agent to complete the HUD-1 or HUD-1A, in accordance with the instructions set forth in Appendix A.  The loan originator must transmit all information necessary to complete the HUD-1 or HUD-1A to the settlement agent.  The settlement agent shall state the actual charges paid by the borrower and seller, as applicable, under § 1024.8(b)(1), or use the average charge for a settlement service under § 1024.8(b)(2).

A violation of § 1024.8(b) also constitutes a violation of § 4 of RESPA (12 U.S.C. § 2603).  However, as specified in § 1024.8(c), an inadvertent or technical error in completing the HUD-1 or HUD-1A would not be deemed a violation of § 4 of RESPA if a revised form, as appropriate, is provided in accordance with the requirements of § 1024.8 within 30 calendar days after settlement.

RESPA-B 1024.9

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.9, requires that if the HUD-1 or HUD-1A is reproduced, changes and insertions specified under § 1024.9(a) and (b) must be made in accordance with the requirements of those subsections.  Section 1024.9(c) allows other deviations for the HUD-1 or HUD-1A if receipt of written approval is obtained from the Consumer Financial Protection Bureau.

RESPA-B 1024.10            

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.10, requires the settlement agent to provide the HUD-1 or HUD-1A, in accordance with the requirements outlined in § 1024.10(a) through (c), unless the exemption under (d) applies. The lender must retain the completed HUD-1 or HUD-1A and related documents in accordance with the recordkeeping requirements of § 1024.10(e).

RESPA-B 1024.12            

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.12, prohibits the imposition of a fee for the preparation and distribution of the HUD-1 or HUD-1A settlement statement, escrow account statements required by § 10 of RESPA (12 U.S.C. § 2609), or statements required by the Truth in Lending Act (15 U.S.C. § 1601 et seq.).

RESPA-B 1024.14            

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.14, prohibits the splitting of charges, and providing or accepting of any kickbacks, referral fees, or other things of value, as outlined in § 1024.14(b) through (d), unless allowed under § 1024.14(g).  All documents provided pursuant to § 1024.14 must be retained for five years from the date of execution.

A violation of § 1024.14 also constitutes a violation of § 8 of RESPA (12 U.S.C. § 2607).

RESPA-B 1024.15            

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.15, requires an affiliated business arrangement to satisfy the conditions outlined in § 1024.15(b).  All documents provided pursuant to § 1024.15 must be retained for five years after the date of execution.

A violation of § 1024.15 also constitutes violations of § 8 of RESPA (12 U.S.C. § 2607) and of 12 C.F.R. § 1024.14.

RESPA-B 1024.17(c)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(c), requires that a servicer meet the requirements for escrow accounts, as applicable, in accordance with the requirements under § 1024.17(c)(1) through (c)(9).

RESPA-B 1024.17(e)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(e), requires a new servicer to provide the borrower with an initial escrow account statement within 60 days of the date of servicing transfer if either the monthly payment amount or the accounting method used is changed.  The new servicer must comply with the requirements set forth in § 1024.17(e)(1) and (e)(2).

RESPA-B 1024.17(f)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(f), requires the servicer to conduct an escrow account analysis to determine whether a surplus, shortage, or deficiency exists as provided under § 1024.17(f)(1). Depending on the outcome, the servicer shall meet the timing and other requirements for surpluses, shortages, and deficiencies outlined in § 1024.17(f)(2) through (f)(4) and provide the required notice of shortage or deficiency as required under § 1024.17(f)(5).

RESPA-B 1024.17(g)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(g), requires the servicer to provide an initial escrow account statement to the borrower at settlement or within 45 calendar days of settlement.  The initial escrow account statement must include the required information, as outlined in § 1024.17(g)(1), and if applicable, within the timeframe outlined in § 1024.17(g)(2).

RESPA-B 1024.17(h)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(h), requires, under (h)(1), that the format and completion of the initial escrow account statement be as set forth in Public Guidance Documents entitled “Initial Escrow Account Disclosure Statement – Format” and “Initial Escrow Account Disclosure Statement – Example” and, in accordance with the requirements of (h)(3), that the payees on initial escrow account statements be sufficiently identified.

RESPA-B 1024.17(i)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(i), requires the servicer to submit an annual escrow account statement to the borrower, in accordance with the form, timing, and content requirements of this section unless the exception in § 1024.17(i)(2) applies.  A servicer is required to follow the short year statement requirements under § 1024.17(i)(4), as applicable.

RESPA-B 1024.17(k)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(k), requires the servicer to pay disbursements for property taxes and hazard insurance in a timely manner in accordance with the requirements of (k)(1) through (k)(5).

RESPA-B 1024.17(l)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.17(l), requires the servicer to follow the specified requirements for noting discretionary payments made as part of a monthly mortgage payment on initial and annual escrow account statements.

RESPA-B 1024.20

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.20, requires a lender, mortgage broker, or dealer that receives an application, or information sufficient to complete an application, to provide the loan applicant with a clear and conspicuous written list of homeownership counseling organizations that provide relevant counseling services in the loan applicant's location and to follow the timing and delivery requirements of § 1024.20(a), unless an exemption applies under § 1024.20(c).  For a federally related mortgage loan that is a home equity line of credit subject to Regulation Z, 12 C.F.R. § 1026.40, a lender or mortgage broker may comply with the requirements in either § 1024.20(a) or 12 C.F.R. § 1026.40(b).

Real Estate Settlement Procedures Act/Regulation X – Subpart C – Mortgage Servicing

RESPA-C 1024.32(a)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.32(a), requires the mortgage servicing disclosures to be made clearly and conspicuously, in writing, and in a form that a recipient may keep.  If the optional notice with acknowledgement form is provided to a successor in interest, the notice must be provided in accordance with the requirements of § 1024.32(c).

RESPA-C 1024.33(a)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.33(a), requires that for reverse mortgage transactions, a lender, mortgage broker, or dealer, as applicable, must provide a servicing disclosure statement that states whether the servicing of the mortgage loan may be assigned, sold, or transferred to another person at any time.  The disclosure must be provided within three days, excluding legal public holidays, Saturdays, and Sundays.

RESPA-C 1024.33(b)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.33(b), requires each transferor servicer and transferee servicer to provide to the borrower a notice of transfer for any assignment, sale, or transfer of the servicing of the mortgage loan, unless specifically excluded in § 1024.33(b)(2). The notice must adhere to the timing requirements outlined in § 1024.33(b)(3) and the content requirements outlined in § 1024.33(b)(4).

RESPA-C 1024.33(c)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.33(c), requires that during the 60-day period beginning on the effective date of transfer, a payment may not be treated as late for any purpose if the former servicer, rather than the new servicer, receives payment on or before the applicable due date (including any grace period allowed under the mortgage loan instrument).  If payment is received incorrectly by the former servicer, the former transferor servicer must promptly adhere to the requirements outlined in §1024.33(c)(2)(i) or (c)(2)(ii).

RESPA-C 1024.34(b)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.34(b), requires a servicer to return to the borrower any amounts within the servicer’s control that remain in an escrow account within 20 days (excluding legal public holidays, Saturdays, and Sundays) of a borrower’s payment of a mortgage loan in full.  The servicer may credit funds to a new escrow account if the requirements outlined in § 1024.34(b)(2) are met.

RESPA-C 1024.35(a)-(d)

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.35(a) through (d), requires a servicer to comply with the error resolution procedures in § 1024.35 when any written notice from the borrower is received that asserts an error, as outlined in § 1024.35(b), and that includes the name of the borrower, information that enables the servicer to identify the borrower’s mortgage loan account, and the error the borrower believes has occurred.  The servicer must provide contact information for borrowers to assert errors in accordance with the requirements under § 1024.35(c), and must provide to the borrower a written response acknowledging receipt of the notice of error, within five days (excluding legal public holidays, Saturdays, and Sundays), after receiving the error notice as required under § 1024.35(d).

RESPA-C 1024.35(e)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.35(e), requires a servicer to investigate and respond to a notice of error as outlined in § 1025.35(e), except as provided in § 1024.35(f) and (g).

RESPA-C 1024.35(g)(2)  

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.35(g)(2), requires a servicer to notify the borrower in writing within 5 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer reasonably determines that the notice of error is duplicative, overbroad, or untimely as provided in § 1024.35(g)(1).  The notice must indicate the basis upon which the servicer has made such determination.

RESPA-C 1024.35(h)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.35(h), prohibits a servicer from charging a fee or requiring a borrower to make any payment that may be owed on a borrower’s account, as a condition of responding to a notice of error.

RESPA-C 1024.35(i)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.35(i), prohibits a servicer from furnishing adverse information to any consumer reporting agency regarding any payment that is the subject of the notice of error for 60 days after receipt of a notice of error.

RESPA-C 1024.36(a)-(c)  

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.36(a) through (c), requires a servicer to comply with the request for information procedures in § 1024.36 when any written request for information from the borrower is received that includes the name of the borrower, information that enables the servicer to identify the borrower’s mortgage loan account, and states the information the borrower is requesting.  The servicer must adhere to the contact information requirements outlined in § 1024.36(b) for borrowers to use to request information and must provide to the borrower a written response acknowledging receipt of the request, within five days (excluding legal public holidays, Saturdays, and Sundays), after receiving the request for information as required under § 1024.36(c).

RESPA-C 1024.36(d)

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.36(d), requires a servicer to investigate and respond to an information request as outlined in § 1025.36(d)(1) through (d)(3), except as provided in § 1024.36(e) and (f).

RESPA-C 1024.36(f)(2)  

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.36(f)(2), requires a servicer to notify the borrower in writing within 5 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer reasonably determines that the request is duplicative, confidential, proprietary or privileged, irrelevant, overbroad, or untimely.  The notice must indicate the basis under § 1026.36(f)(1) upon which the servicer has made such determination.

RESPA-C 1024.36(g)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.36(g), prohibits a servicer from charging a fee or requiring a borrower to make any payment that may be owed, as a condition of responding to an information request, unless permitted in § 1024.36(g)(2).

RESPA-C 1024.36(i)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.36(i), requires a servicer to treat the potential successors in interest as a borrower for the purposes of the requirements of § 1024.36(c) through (g) and to adhere to the written request requirements as outlined in § 1024.36(i).

RESPA-C 1024.37(b)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.37(b), prohibits a servicer from assessing a premium charge or fee related to force-placed insurance on a borrower, unless the servicer has a reasonable basis to believe that the borrower has failed to comply with the mortgage loan contract's requirement to maintain hazard insurance.

RESPA-C 1024.37(c)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.37(c), prohibits the servicer from assessing the borrower any premium charge or fee related to force-placed insurance until the delivery requirements outlined in § 1024.37(c)(1) have been met.  The first written force-placed insurance notice required by § 1024.37(c)(1)(i) must contain the information outlined in § 1024.37(c)(2).  The information in § 1024.37(c)(2)(iv), (vi), and (ix)(A) and (ix)(B) must be in bold text, except that the information about the physical address of the borrower's property may be set in regular text.  The servicer is prohibited from including any information other than the information required by § 1024.37(c)(2) and the mortgage loan account number.

RESPA-C 1024.37(d)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.37(d), requires a servicer to deliver or place in the mail a written reminder notice at least 15 days before a premium charge or fee related to force-placed insurance. A servicer may not deliver or place in the mail the reminder notice until at least 30 days after providing the first written notice required by § 1024.37(c)(1)(i).  If certain information is not received by the servicer after delivering the written reminder notice required by § 1024.37(c)(1)(i), the servicer must provide a notice containing the information outlined in § 1024.37(d)(2)(i) or (d)(2)(ii), as applicable.  The information in § 1024.37(d)(2)(i)(B) and (d)(2)(i)(D), must be in bold text and the information in § 1024.37(d)(2)(i)(C) must be as outlined in § 1024.37(c)(3).  The servicer is prohibited from including any information other than the information required by § 1024.37(d)(2)(i) or (d)(2)(ii), and the mortgage loan account number.

RESPA-C 1024.37(e)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.37(e), prohibits the servicer from assessing the borrower any premium charge or fee related to renewing or replacing force-placed insurance, until the written notice requirements outlined in § 1024.37(e) have been met.  The written renewal notice required by § 1024.37(e)(1)(i) must contain the information outlined in § 1024.37(e)(2).  The information in § 1024.37(e)(2)(iv), (vi)(B), and (vii)(A) through (C) must be in bold text, except that the information about the physical address of the borrower's property may be set in regular text. The servicer is prohibited from including any information in the written notice, other than the information required by § 1024.37(e)(2) and the mortgage loan account number.  The servicer must provide the written renewal notice before each anniversary of purchasing force-placed insurance on a borrower’s property.

RESPA-C 1024.37(f)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.37(f), requires a servicer to use a class of mail not less than first-class mail, if the notices required by § 1024.37(c)(1)(i), (c)(1)(ii), or (e)(1) are mailed.

RESPA-C 1024.37(g)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.37(g), requires a servicer to adhere to the cancellation requirements outlined in § 1024.37(g), within 15 days of receiving evidence that the borrower has had in place hazard insurance coverage that complies with the loan contract’s requirements to maintain hazard insurance.

RESPA-C 1024.37(h)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.37(h), requires that all charges related to force-placed insurance assessed to a borrower, by or through the servicer, must be bona fide and reasonable, except for charges subject to State regulation and charges authorized by the Flood Disaster Protection Act of 1973.

RESPA-C 1024.38(a)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.38(a), requires a servicer to maintain policies and procedures that are reasonably designed to achieve the objectives set forth in § 1024.38(b).

RESPA-C 1024.38(c)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.38(c), requires a servicer to retain records that document actions taken with respect to a borrower’s mortgage loan account until one year after the date a mortgage loan is discharged or servicing of a mortgage loan is transferred.  For each mortgage loan serviced, the servicer must maintain the documents and data outlined in § 1024.38(c)(2)(i) through (c)(2)(v), in a manner that facilitates compiling such documents and data into a servicing file within five days.

RESPA-C 1024.39(a)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.39(a), requires a servicer to establish or make good faith efforts to establish live contact with a delinquent borrower no later than the 36th day of a borrower’s delinquency and again no later than 36 days after each payment due date so long as the borrower remains delinquent, unless exempt by § 1024.39(c) or (d). Promptly after establishing live contact with a borrower, the servicer must inform the borrower about the availability of loss mitigation options, if appropriate.

RESPA-C 1024.39(b)

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.39(b), requires the servicer to provide to a delinquent borrower written notices in accordance with the timing requirements of § 1024.29(b)(1) and the content requirements of § 1024.29(b)(2), unless exempt by § 1024.39(c) or (d).

RESPA-C 1024.39(c)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.39(c), requires the servicer to comply with modified early intervention written notice requirements when the conditions of § 1024.39(c)(1)(ii) are not met and any borrower on the mortgage loan is a debtor in bankruptcy.  The modified early intervention written notice must comply with the content and timing requirements in § 1024.39(c)(1)(iii).  A previously exempt servicer must resume compliance with § 1024.39(a) and (b) after the next payment due date that follows the earliest of the events outlined in § 1024.39(c)(2)(i), unless exempt by § 1024.39(c)(2)(ii).

RESPA-C 1024.39(d)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.39(d), requires a servicer to comply with the modified early intervention written notice requirements outlined in § 1024.39(d), if the servicer is a debt collector under the Fair Debt Collections Practices Act (FDCPA) and the borrower has invoked FDCPA cease communication protections.

RESPA-C 1024.40            

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.40, requires a servicer to maintain policies and procedures that facilitate continuity of contact between the borrower and servicer and are reasonably designed to achieve the objectives set forth in § 1024.40(a).  The servicer must maintain policies and procedures reasonably designed to ensure that servicer personnel assigned to a delinquent borrower perform the functions outlined in § 1024.40(b).

RESPA-C 1024.41(b)

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(b), requires a servicer to exercise reasonable diligence in obtaining documents and information to complete a loss mitigation application and adhere to the review and determination of protection requirements outlined in § 1024.41(b)(2) and (b)(3).

RESPA-C 1024.41(c)

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(c), requires a servicer to evaluate complete loss mitigation applications in accordance with the requirements of § 1024.41(c)(1), and to evaluate incomplete loss mitigation applications in accordance with the requirements of § 1024.41(c)(2).  Within 5 days (excluding legal public holidays, Saturdays, and Sundays) of receiving a borrower’s complete loss mitigation application, the servicer must provide written notice to the borrower containing the information outlined in § 1024.41(c)(3)(i), unless exempt by § 1024.41(c)(3)(ii).  For information that is not in the borrower’s control, the servicer must adhere to the requirements in § 1024.41(c)(4).

RESPA-C 1024.41(d)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(d), requires that if the servicer denies a complete loss mitigation application for any trial or permanent loan modification option, the notice provided to the borrower pursuant to § 1024.41(c)(1)(ii) must also state the servicer's specific reason(s) for denying each trial or permanent loan modification option, and, if applicable, that the borrower was not evaluated on other criteria.

RESPA-C 1024.41(e)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(e), requires a servicer offering a loss mitigation option to provide the borrower the prescribed time to accept or reject the option, as outlined in § 1024.41(e).

RESPA-C 1024.41(f)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(f), prohibits a servicer (including a small servicer) from making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless the requirements of § 1024.41(f)(1) are met.  If a borrower submits a complete loss mitigation application during the pre-foreclosure review period, the servicer must not make the first notice or filing required by applicable law, unless the servicer satisfies the requirements of § 1024.41(f)(2).

RESPA-C 1024.41(g)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(g), prohibits a servicer from moving for foreclosure judgement or order of sale, or conducting a foreclosure sale, if a borrower submits a complete loss mitigation application within the prescribed timeframe, unless one of the actions in § 1024.41(g) has occurred.

RESPA-C 1024.41(h)       

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(h), requires that a servicer permit a borrower to appeal the denial of a loss mitigation application (trial or permanent), if the complete loss mitigation application was received during the prescribed timeframe.  The servicer must abide by the required deadline in § 1024.41(h)(2), the independent evaluation requirements in § 1024.41(h)(3), and the appeal determination notification requirements outlined in § 1024.41(h)(4).

RESPA-C 1024.41(j)        

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(j), prohibits a small servicer from moving for foreclosure judgement or order of sale, or conducting a foreclosure sale under § 1024.41(f)(1), if a borrower is performing pursuant to the terms of an agreement on a loss mitigation option.

RESPA-C 1024.41(k)         

The Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.), as implemented by Regulation X, 12 C.F.R. § 1024.41(k), requires that if the servicing of a mortgage loan is transferred when a loss mitigation application is pending, the transferee servicer must comply with the loss mitigation procedures under § 1024.41 based on the date the transferor servicer received the loss mitigation application, and must follow the timing requirements, notice requirements, and procedures outlined in § 1024.41(k).

Resolution and Receivership Rules – Sweep Account Disclosures

SWEEP-REPO 360.8(e)   

The Federal Deposit Insurance Act (12 U.S.C. § 1821(d) and (e)), as implemented by the Resolutions and Receivership rules, 12 C.F.R. § 360.8(e), requires a financial institution to prominently disclose in writing to sweep account customers (at least annually) whether their swept funds are deposits within the meaning of 12 U.S.C. § 1813(l).  If the funds are not deposits, the institution must further disclose the status such funds would have if the institution failed.  The disclosure requirements imposed under this provision do not apply under certain listed exceptions.

Right To Financial Privacy Act

RTFPA 1103(a)-(b)          

Section 1103(a) and (b) of the Right to Financial Privacy Act of 1978 (12 U.S.C. § 3401 et seq.), prohibits a financial institution from providing to any Government authority access to or copies of, or the information contained in, the financial records of any customer, except in accordance with the provisions of the Act, and from releasing the financial records of a customer until the Government authority seeking such records certifies in writing to the financial institution that it has complied with the applicable provisions of the Act.

RTFPA 1104(No Subsection)         

Section 1104 of the Right to Financial Privacy Act of 1978 (12 U.S.C. § 3401 et seq.), prohibits a financial institution from requiring a customer’s authorization of disclosure of his or her financial records to the Government as a condition of doing business with the financial institution. In addition, the financial institution must keep a record of all instances in which a customer’s financial records were disclosed to the Government authority, and upon a customer’s request, the financial institution must give the customer a copy of the record kept for such instances, as prescribed by § 1104(c).

RTFPA 1111(No Subsection)         

Section 1111 of the Right to Financial Privacy Act of 1978 (12 U.S.C. § 3401 et seq.), requires a financial institution, upon request by a Government authority, to assemble the records requested upon receipt of a request for financial records by a Government authority under §§ 1105 and 1107, and to prepare to deliver the records to the Government authority upon receipt of the certificate pursuant to

§ 1103(b).

RTFPA 1113(h)(6)            

Section 1113(h)(6) of the Right to Financial Privacy Act of 1978 (12 U.S.C. § 3401 et seq.), requires a financial institution to keep a notation of each disclosure of a customer’s financial records to a Government authority in connection with the Government authority’s consideration or administration of assistance to the customer in the form of a Government loan, loan guaranty, or loan insurance program.  In addition, the financial institution must permit the customer to inspect this information upon request.

Secure and Fair Enforcement for Mortgage Licensing Act

SAFE-ACT 1007.103(a)

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. § 5101 et seq.), as implemented by Regulation G, 12 C.F.R. § 1007.103(a), requires each bank employee who acts as a mortgage loan originator to register with the Nationwide Mortgage Licensing System and Registry (Registry), obtain a unique identifier, and maintain registration in accordance with the requirements of this part.  A bank that employs one or more individuals who act as a residential mortgage originator is required to have each such employee comply with the registration requirements of this part.  The bank must ensure an employee who is subject to the registration requirements does not act as a residential loan originator unless such employee is registered with the Registry.  Further, a bank employee who previously registered, according to the requirements set forth in § 1007.103(a), before the employee becomes subject to this part at the current bank, is required to meet the conditions in § 1007.103(a)(4)(A) through (D) are met.

The conditions outlined in § 1007.103(a)(4)(i)(A), (a)(i)(C), and (a)(i)(D) must be met when registered or licensed mortgage loan originators become bank employees as a result of an acquisition, consolidation, merger, or reorganization.  These requirements must be met within 60 days from the effective date of the acquisition, merger, or reorganization.

SAFE-ACT 1007.103(b)

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. § 5101 et seq.), as implemented by Regulation G, 12 C.F.R. § 1007.103(b), requires mortgage loan originators who are registered with the Nationwide Mortgage Licensing System and Registry to maintain their registration in accordance with the requirements of § 1007.103(b)(1) through (b)(3).

SAFE-ACT 1007.103(d) 

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. § 5101 et seq.), as implemented by Regulation G, 12 C.F.R. § 1007.103(d), requires a bank to require each employee who is a mortgage loan originator to submit to the Nationwide Mortgage Licensing System and Registry the registration information under § 1007.103 (d)(1)(i) through (d)(1)(ix). Alternatively, the bank may delegate an employee to submit the information on the covered employee’s behalf provided this individual does not act as a mortgage loan originator. Further, this section requires a bank employee registering, renewing, or updating his or her registration as a mortgage loan originator to provide the appropriate authorizations and attestation of the registration.

SAFE-ACT 1007.103(e)  

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. § 5101 et seq.), as implemented by Regulation G, 12 C.F.R. § 1007.103(e), requires a bank to submit to the Nationwide Mortgage Licensing System and Registry, the information concerning the covered financial institution’s record as specified in § 1007.103(e)(1)(i) through (e)(1)(iv); and the employee information under § 1007.103(e)(2).

SAFE-ACT 1007.104       

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. § 5101 et seq.), as implemented by Regulation G, 12 C.F.R. § 1007.104, requires a bank that employs one or more mortgage loan originators to adopt and follow written procedures designed to assure compliance with § 1007.104.  These policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the bank, and apply only to those employees acting within the scope of their employment.  At a minimum, these policies and procedures must include the information specified in § 1007.104(a) through (i) of this section.

SAFE-ACT 1007.105      

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. § 5101 et seq.), as implemented by Regulation G, 12 C.F.R. § 1007.105, requires a bank to make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution.  Further, a registered mortgage loan originator must provide his or her unique identifier to a consumer: (1) upon request; (2) before acting as a mortgage loan originator; and (3) through the originator’s initial written communication with a consumer, whether on paper or electronically.

Servicemember's Civil Relief Act

SCRA 108(No Subsection)              

Section 108 of the Servicemembers Civil Relief Act of 2003 (50 U.S.C. § 3919), prohibits a creditor from taking certain adverse actions against a servicemember due to the servicemember exercising his/her rights under the Servicemembers Civil Relief Act.  Such adverse actions include, but are not limited to denying or revoking credit, changing the terms of an existing credit arrangement, or refusing to grant credit to the servicemember in substantially the amount or on substantially the terms requested.

SCRA 207(a)-(b)

Section 207(a) and (b) of the Servicemembers Civil Relief Act of 2003 (50 U.S.C. § 3937(a)-(b)), requires a creditor to reduce the interest rate on a servicemember’s obligations, or of a servicemember and spouse jointly, incurred prior to entry into military service, to no more than 6 percent for the duration of the servicemember’s military service, upon receipt of written notice and a copy of the servicemember’s military orders or another appropriate indicator of military service.  A creditor that reduces the interest rate on a servicemember’s obligations, or a servicemember and spouse jointly, is required to forgive interest in excess of 6 percent, and to reduce any periodic payment due from a servicemember by the amount of interest forgiven.  The interest rate reduction must be applied retroactively to the date on which the servicemember is called to military service. Note that for mortgage loans, trust deeds, or other security in the nature of a mortgage, § 2203(b) of the Housing and Economic Recovery Act of 2008, extends the 6 percent interest rate cap to one year after the end of the period of military service.

SCRA 302(a)      

Section 302(a) of the Servicemembers Civil Relief Act of 2003 (50 U.S.C. § 3952(a)), prohibits a creditor from rescinding or terminating contracts by a servicemember, after that servicemember enters active-duty military service, for the purchase, lease, or bailment of real or personal property (including a motor vehicle) for a breach of terms occurring before or during military service, without a court order, if the servicemember has paid a deposit or installment prior to entry into military service.  A creditor is also prohibited from repossessing the property of a servicemember after the servicemember enters active-duty military service due to a breach of terms occurring before or during military service without a court order, if the servicemember has paid a deposit or installment prior to entry into military service.

SCRA 303(a)-(c)

Section 303(a) through (c) of the Servicemembers Civil Relief Act of 2003 (50 U.S.C. § 3953(a)-(c)), prohibits the sale, foreclosure, or seizure of real or personal property due to a breach of an obligation by a servicemember during the period of military service or within one year thereafter, except if: (1) a court order has been granted, or (2) the sale, foreclosure or seizure of property is made pursuant to an agreement as provided in § 107 of the Servicemembers Civil Relief Act (50 U.S.C. § 3918).  The prohibition only applies to obligations that originated prior to the servicemember's entry into military service for which the servicemember is still obligated, and is secured by a mortgage, trust deed, or other security instrument.

SCRA 305(d);(f)

Section 305(d) and (f) of the Servicemembers Civil Relief Act of 2003 (50 U.S.C. § 3955(d) and (f)), requires that:

(1) in the case of a lease, as described in § 305(b)(1) of the Servicemembers Civil Relief Act (50 U.S.C. § 3955(b)(1)), termination of the lease under § 305(a) (50 U.S.C. 3955(a)) is effective 30 days after the next due date for rent following the day that the written notice described in § 305(c) of the Servicemembers Civil Relief Act (50 U.S.C. § 3955(c)), is delivered; and

(2) the creditor refund rent or lease amounts paid in advance for a period after the effective date of the lease termination.  Such refund must be made within 30 days of the effective date of the termination of the lease.

SCRA 306(a)     

Section 306(a) of the Servicemembers Civil Relief Act of 2003 (50 U.S.C. § 3957(a), prohibits a creditor from exercising any right or option obtained under an assignment of the servicemember’s life insurance policy during the period of military service or within one year thereafter, without a court order.  The prohibition pertains to assignments which occurred prior to the servicemembers entry into military service and is subject to the exceptions specified in § 306(b) of the Servicemembers Civil Relief Act (50 U.S.C. § 3957(b)).

Telephone Consumer Protection Act/ Miscellaneous Rules Relating to Common Carriers

TCPA-MRCC 64.1200(a)

The Communications Act of 1934, as amended by the Telephone Consumer Protection Act (47 C.F.R. § 227) and as implemented by the Miscellaneous Rules Relating to Common Carriers 47 C.F.R. § 64.1200(a), prohibits any person or entity from: initiating any telephone call (other than a call made for emergency purposes or made with the prior express consent of the called party) using an automatic telephone dialing system or an artificial or pre-recorded voice to any emergency telephone line, telephone line of any guest room or patient room, or to any telephone number assigned to a paging service, except as provided by § 64.1200(a)(2); initiating any telephone call to any residential line using an artificial or pre-recorded voice to deliver a message without the prior express written consent of the called party unless the call meets the conditions prescribed in § 64.1200(a)(3)(i)-(v); using a telephone facsimile machine, computer, other device to send an unsolicited advertisement to a telephone facsimile machine unless the call meets the conditions prescribed in § 64.1200(a)(4)(i)-(vi); using an automatic telephone dialing system in such a way that two or more telephone lines of a multi-line business are engaged simultaneously; disconnecting an unanswered telemarketing call prior to at least 15 seconds or four (4) rings; abandoning more than three percent of all telemarketing calls that are answered live by a person and not following the abandonment-related requirements of § 64.1200(a)(7)(i)-(iv); and using any technology to dial any telephone number for the purpose of determining whether the line is a facsimile or voice line.

TCPA-MRCC 64.1200(b)

The Communications Act of 1934, as amended by the Telephone Consumer Protection Act (47 U.S.C. § 227) and as implemented by the Miscellaneous Rules Relating to Common Carriers, 47 C.F.R. § 64.1200(b), require that all artificial or pre-recorded voice telephone messages state clearly at the beginning of the message the identity of the business, individual, or other entity responsible for initiating the call; state clearly during or after the message the telephone number (other than that of the auto dialer or pre-recorded message player that placed the call) of the business, other entity, or individual subject to the conditions in § 64.1200(b)(2); and provide an automated, interactive voice- and/or key press-activated opt-out mechanism for the called person to make a do-not-call request subject to the conditions of § 64.1200(b)(3).

TCPA-MRCC 64.1200(c)

The Communications Act of 1934, as implemented by the Telephone Consumer Protection Act (47 U.S.C. § 227) and as implemented by the Miscellaneous Rules Relating to Common Carriers, 47 C.F.R. § 64.1200(c), prohibits any person or entity from initiating any telephone solicitation to: any residential telephone subscriber before 8 a.m. or after 9 p.m. (local time of the called party’s location); or a residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the Federal Government, unless the person or entity meets requirements under § 64.1200(c)(2)(i)-(iii).

TCPA-MRCC 64.1200(d)

The Communications Act of 1934, as implemented by the Telephone Consumer Protection Act (47 U.S.C. § 227) and as implemented by the Miscellaneous Rules Relating to Common Carriers, 47 C.F.R. § 64.1200(d), prohibit a person or entity from initiating any call for telemarketing purposes to a residential telephone subscriber unless such person or entity has instituted procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that person or entity.  The procedures must meet the following minimum standards: written policy; training of personnel engaged in telemarketing; recording and disclosing do-not-call requests; identification of sellers and telemarketers; affiliated persons or entities, and the maintenance of do-not-call lists.

TCPA-MRCC 68.1604(a)

The Communications Act of 1934, as amended by the Telephone Consumer Protection Act (47 U.S.C. § 227), and as implemented by the Miscellaneous Rules Relating to Common Carriers, 47 C.F.R. § 64.1604(a), prohibits any person or entity within or outside the United States, if the recipient is within the United States, in connection with any voice service or text messaging service to knowingly cause, directly or indirectly, any caller identification service to transmit or display misleading or inaccurate caller identification information with the intent to defraud, cause harm, or wrongfully obtain anything of value.

TCPA-MRCC 68.318(d)

The Communications Act of 1934, as amended by the Telephone Consumer Protection Act (47 U.S.C. § 227), and as implemented by the Federal Communications Commission rules, 47 CFR § 68.318(d), makes it unlawful for any person within the United States to use a computer or other electronic device to send any message via telephone facsimile machine unless such message clearly contains in a margin at the top or bottom of each transmitted page or on the first page of the transmission, the date and time it is sent and an identification of the business, other entity, or individual sending the message and the telephone number of the sending machine or of such business, other entity or individual.  Other requirements as outlined in 68.318(d), must also be met if applicable.

Truth in Lending Act/Regulation Z – Subpart B – Open-End Credit

TILA-B 1026.5(a)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.5(a), requires the creditor to make the disclosures required for open-end credit clearly and conspicuously in writing, and in a form the consumer may keep, except as provided in § 1026.5(a)(ii)(A)-(B).

TILA-B 1026.5(b)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.5(b), requires the creditor to provide the disclosures required for open-end credit within the timelines set forth in § 1026.5(b)(1) through (b)(4).

TILA-B 1026.5(c)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.5(c), requires that the open-end credit disclosures provided by the creditor reflect the terms of the legal obligation between the parties.  If any information necessary for accurate disclosure is unknown to the creditor, it shall make the disclosure based on the best information reasonably available and shall state clearly that the disclosure is an estimate.

TILA-B 1026.6(a)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.6(a), requires the creditor to provide the consumer account opening disclosures for home equity plans secured by a dwelling under § 1026.40, that disclose the items listed under § 1026.6(a), to the extent applicable.

TILA-B 1026.6(b)

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.6(b), requires the creditor to provide the account opening disclosures in § 1026.6(b) for open-end plans other than home equity plans secured by a dwelling under § 1026.40.

TILA-B 1026.7(a)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.7(a), requires the creditor to provide the consumer a periodic statement for home equity plans secured by a dwelling under § 1026.40, that discloses the information outlined under § 1026.7(a), as applicable.

TILA-B 1026.7(a); 108(e)

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.7(a), requires the creditor to provide the consumer a periodic statement for home equity plans secured by a dwelling under § 1026.40, that discloses the information outlined under § 1026.7(a), as applicable.

Section 108(e)(1) and (e)(2) of the Truth in Lending Act (12 U.S.C. § 1607(e)), requires the FDIC to notify creditors in cases where an annual percentage rate or finance charge was inaccurately disclosed and to make monetary adjustments to the accounts of consumers in cases where the annual percentage rate or finance charge has been understated by more than the allowed tolerances as a result of a clear and consistent pattern or practice of violations, gross negligence, or a willful violation which was intended to mislead the person to whom the credit was extended, unless an exception under this section applies.

TILA-B 1026.7(b)              

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.7(b), requires the creditor to provide the consumer with a periodic statement for open-end plans other than home equity plans secured by a dwelling under § 1026.40, that discloses the information outlined in § 1026.7(b), as applicable.

TILA-B 1026.8  

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.8, requires the creditor to identify credit transactions on or with the first periodic statement that reflects the transaction, by furnishing the information in § 1026.8(a) or (b), as applicable.

TILA-B 1026.9(a)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(a), requires the creditor to comply with the subsequent disclosure requirements for furnishing the statement of billing rights as outlined under § 1026.9(a)(1) pertaining to the annual statement.

TILA-B 1026.9(b)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(b), requires the creditor to comply with the disclosure requirements for supplemental credit access devices and additional features as provided in § 1026.9(b)(1) through (b)(3).

TILA-B 1026.9(c)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(c), requires the creditor to follow the change in terms requirements provided in § 1026.9(c)(1) and (c)(2), as applicable.

TILA-B 1026.9(d)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(d), requires any person, other than the card issuer, who imposes a finance charge at the time of honoring a consumer’s credit card, to disclose the amount of that finance charge prior to its imposition.

TILA-B 1026.9(e)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(e), requires the card issuer, upon renewal of a credit or charge card, to follow the disclosure requirements provided in § 1026.9(e)(1) and (e)(2).

TILA-B 1026.9(f)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(f), requires the card issuer to comply with the disclosure requirements for changes in the credit card account insurance provider as provided in § 1026.9(f)(1) through (f)(3).

TILA-B 1026.9(g)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(g), requires the creditor to comply with the requirements for increases in rates due to delinquency or default, or as a penalty as provided in § 1026.9(g)(1) through (g)(3) for plans other than home equity plans subject to the requirements of § 1026.40.

TILA-B 1026.9(h)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.9(h), requires the creditor to comply with the requirements pertaining to the consumer’s rejection of certain significant changes in terms as provided in § 1026.9(h)(1) and (h)(2).

TILA-B 1026.10

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.10, requires the creditor to follow the payment crediting requirements for open-end credit as provided in § 1026.10(a) through (f).

TILA-B 1026.11

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.11, requires the creditor to follow the requirements for treatment of open-end credit balances and for account termination as provided in § 1026.11(a) through (c).

TILA-B 1026.13

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. §   1026.13, requires the creditor to follow the billing error resolution requirements for open-end credit as provided in § 1026.13(c) through (g).

TILA-B 1026.12

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.12, requires the creditor to follow the special credit card provisions as provided in § 1026.12(a) through (f).

TILA-B 1026.15(b)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.15(b), requires that in any transaction or occurrence subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act).  The notice shall identify the transaction or occurrence, and clearly and conspicuously disclose the information as provided in § 1026.15(b)(1) through (b)(5).

TILA-B 1026.15(c)            

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.15(c), prohibits a creditor from disbursing any money other than in escrow, performing any services, or delivering any materials until after the rescission period has expired and the creditor is reasonably satisfied that the consumer has not rescinded, unless a consumer waives the right to rescind under § 1026.15(e).

TILA-B 1026.15(d)(2)     

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.15(d)(2), requires that within 20 calendar days after receipt of a notice of rescission from a consumer, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.

TILA-B 1026.16(a)-(c)     

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.16(a) through (c), requires that if an advertisement for open-end credit states specific credit terms, it shall state only those that actually are or will be arranged or offered by the creditor, and if certain terms are advertised as described in § 1026.16(b), additional disclosures must be made as provided in § 1026.16(b)(1) and (b)(2).  Catalogs or other multiple-page advertisements and electronic advertisements shall comply with § 1026.16(c)(2), as applicable.

TILA-B 1026.16(d)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.16(d), requires home-equity plan advertisements to adhere to additional requirements as provided in § 1026.16(d)(1) through (d)(6).

TILA-B 1026.16(f)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.16(f), prohibits an advertisement for open-end credit from referring to an annual percentage rate as “fixed,” or using a similar term, unless the advertisement also specifies a time period that the rate will be fixed and will not increase during that period, or if no such time period is provided, that the rate will not increase while the plan is open.

TILA-B 1026.16(g)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.16(g), requires additional disclosures for promotional rates and fees advertised for open-end (not home-secured) credit plans, as provided in § 1026.16(g)(3) and (4).

TILA-B 1026.16(h)(3)-(4)

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.16(h)(3) and (4), requires additional disclosures for advertisements of deferred interest open-end credit plans not subject to § 1026.40.

Truth in Lending Act/Regulation Z – Subpart C – Closed-End Credit

TILA-C 1026.17(a)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.17(a), requires the creditor to make the disclosures for closed-end credit required by Subpart C, except as required by § 1026.19(e), (f), and (g), clearly, conspicuously, grouped together or segregated as required, in writing and in a form the consumer may keep.  The terms "finance charge" and "annual percentage rate," when required to be disclosed under § 1026.18(d) and (e), together with a corresponding amount or percentage rate, must be more conspicuous than other disclosures, except the creditor’s identity under § 1026.18(a).  For private education loan disclosures, the term "annual percentage rate" and the corresponding percentage rate must be less conspicuous than the term "finance charge" and corresponding amount under § 1026.18(d), the interest rate under § 1026.47(b)(1)(i) and (c)(1), and the notice of the right to cancel under § 1026.47(c)(4).

TILA-C 1026.17(b)          

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.17(b), requires the creditor to make disclosures for closed-end credit, before consummation of the transaction, except for the disclosures required by § 1026.19(e), (f), and (g) and § 1026.20(e).  The timing of disclosures under § 1026.17(b) may be delayed for transactions covered under § 1026.17(g) and (h), and other special timing requirements apply for certain other transactions as specified under § 1026.17(b).

TILA-C 1026.17(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.17(c), requires the creditor to provide disclosures that reflect the terms of the legal obligation between the parties, and to adhere to the basis of disclosures and the use of estimates as required by § 1026.17(c)(2) through (c)(5).

TILA-C 1026.17(f)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.17(f), requires that when disclosures are given before consummation and a subsequent event makes them inaccurate, the creditor must re-disclose any changed term unless the term was based on an estimate and labeled as such, or all changed terms if the disclosed annual percentage rate varies by more than the tolerance allowed by § 1026.22(a).  This re-disclosure requirement does not apply to private education loan disclosures made in compliance with § 1026.47.

TILA-C 1026.18(a)-(c)     

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(a) through (c), requires a creditor to disclose the information related to the creditor’s identity, amount financed, and the itemization of amount financed, as applicable, for each closed-end transaction other than mortgage transactions subject to § 1026.19(e) and (f).

TILA-C 1026.18(d)          

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(d), requires the creditor to accurately disclose the “finance charge,” using that term, for each closed-end credit transaction other than mortgage transactions subject to § 1026.19(e) and (f).  The disclosure must include a brief description such as “the dollar amount the credit will cost you” and shall be treated as accurate if the amount disclosed as the finance charge satisfies § 1026.18(d)(1)(i) or (d)(1)(ii) for mortgage loans and § 1026.18(d)(2) for other credit transactions.

TILA-C 1026.18(d); 108(e)             

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(d), requires the creditor to accurately disclose the “finance charge,” using that term, for each closed-end credit transaction other than mortgage transactions subject to § 1026.19(e) and (f).  The disclosure must include a brief description such as “the dollar amount the credit will cost you” and shall be treated as accurate if the amount disclosed as the finance charge for mortgage loans satisfies § 1026.18(d)(1)(i) or (d)(1)(ii) and for other credit transactions, if it satisfies § 1026.18(d)(2).

Section 108(e)(1) and (e)(2) of the Truth in Lending Act (12 U.S.C. § 1607(e)), requires the FDIC to notify creditors in cases where the finance charge was inaccurately disclosed and to make monetary adjustments to the accounts of consumers in cases where the finance charge has been understated by more than the allowed tolerances as a result of a clear and consistent pattern or practice of violations, gross negligence, or a willful violation which was intended to mislead the person to whom the credit was extended, unless an exception under this section applies.

TILA-C 1026.18(e)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(e), requires the creditor to disclose the “annual percentage rate,” using that term, for each applicable closed-end credit transaction other than mortgage transactions subject to § 1026.19(e) and (f). The disclosure must include a brief description such as “the cost of your credit as a yearly rate.”

TILA-C 1026.18(e)-108(e)              

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(e), requires the creditor to disclose the “annual percentage rate,” using that term, for each applicable closed-end credit transaction other than mortgage transactions subject to § 1026.19(e) and (f). The disclosure must include a brief description such as “the cost of your credit as a yearly rate.”

Section 108(e)(1) and (e)(2) of the Truth in Lending Act (12 U.S.C. § 1607(e)), requires the FDIC to notify creditors in cases where the annual percentage rate was inaccurately disclosed and to make monetary adjustments to the accounts of consumers in cases where the annual percentage rate has been understated by more than the allowed tolerances as a result of a clear and consistent pattern or practice of violations, gross negligence, or a willful violation which was intended to mislead the person to whom the credit was extended, unless an exception under this section applies.                

TILA-C 1026.18(f)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(f), requires a creditor to disclose the information outlined in § 1026.18(f)(1) for applicable variable rate transactions, other than for mortgage transactions subject to § 1026.19(e) and (f), or as provided in § 1026.18(f)(3).  The creditor must disclose the information outlined in § 1026.18(f)(2) if the annual percentage rate may increase after consummation for transactions secured by the consumer’s principal dwelling that have terms greater than one year.

TILA-C 1026.18(g)-(j)

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(g) through (j), requires a creditor to disclose the information related to the payment schedule, total of payments, any demand feature, and total sales price, as applicable, for each closed-end transaction other than mortgage transactions subject to § 1026.19(e) and (f).

TILA-C 1026.18(k)-(m)

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(k) through (m), requires a creditor to disclose the information related to any prepayment penalty, late payment charge, and security interest, as applicable, for each closed-end transaction other than mortgage transactions subject to § 1026.19(e) and (f).

TILA-C 1026.18(n)-(o)    

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(n) and (o), requires a creditor to disclose information related to insurance, debt cancellation, and certain security interest charges, as applicable, for each closed-end transaction other than mortgage transactions subject to § 1026.19(e) and (f).  Under § 1026.18(n), creditors must disclose the items required by § 1026.4(d) in order to exclude certain insurance premiums and debt cancellation fees from the finance charge.  Under § 1026.18(o), creditors must make disclosures required by § 1026.4(e) in order to exclude from the finance charge certain fees prescribed by law or certain premiums for insurance in lieu of perfecting a security interest.

TILA-C 1026.18(p)-(r)      

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(p) through (r), requires a creditor to disclose the information related to the contract document, assumption policy, and required deposit, as applicable, for each closed-end transaction other than mortgage transactions subject to § 1026.19(e) and (f).

TILA-C 1026.18(s)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(s), requires that for closed-end transactions secured by real property or a dwelling, the creditor must disclose specific information about the interest rate and payments, other than for transactions that are subject to § 1026.19(e) and (f).  The disclosures must be in accordance with the form requirements of § 1026.18(s)(1), the interest rate requirements of § 1026.18(s)(2), the payment requirements of § 1026.18(s)(3) through (s)(5), and the special disclosure requirements of § 1026.18(s)(6).

TILA-C 1026.18(t)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.18(t), requires that for a closed-end transaction secured by real property or a dwelling, the creditor must disclose a “No-guarantee-to-refinance” statement, other than for transactions that are subject to § 1026.19(e) and (f).  The statement must be in a form substantially similar to Model Clause H-4(k) in Appendix H of Content of Disclosures.

TILA-C 1026.19(a)          

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.19(a), requires that for reverse mortgage transactions subject to both § 1026.33 and the Real Estate Settlement Procedures Act (12 U.S.C. § 2601) secured by the consumer’s dwelling, the creditor must provide the consumer with good faith estimates of the disclosures required by § 1026.18.  The creditor must deliver or place the disclosures in the mail no later than the third business day after the creditor receives the consumer’s written application. The creditor must adhere to the imposition of fee requirements of § 1026.19(a)(ii) and (a)(iii), the waiting period requirements of § 1026.19(a)(2), the waiver of waiting period requirements of § 1026.19(a)(3), and the notice requirements of § 1026.19(a)(4).

TILA-C 1026.19(b);(d)      

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.19(b) and (d), requires that for variable-rate transactions secured by the consumer’s principal dwelling with a term greater than a year, in which the annual percentage rate may increase after consummation, the creditor must provide the disclosures outlined in § 1026.19(b) at the time an application form is provided or before the consumer pays a non-refundable fee, whichever is earlier, except as provided under § 1026.19(d).

TILA-C 1026.19(e)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.19(e), requires the creditor to provide a consumer in a closed-end consumer credit transaction secured by real property or a cooperative unit, a loan estimate disclosing the information required under § 1026.37.  The disclosures must adhere to the requirements of § 1026.19(e)(1), the pre-disclosure activity requirements of § 1026.19(e)(2), the good faith determination for estimates of closing cost requirements of § 1026.19(e)(3), and the provision and receipt of revised disclosure requirements of § 1026.19(e)(4).

TILA-C 1026.19(f)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.19(f), requires the creditor to provide a consumer in a closed-end consumer credit transaction secured by real property or a cooperative unit, a closing disclosure with the information required under § 1026.38.  The disclosures must adhere to the provision of disclosure requirements of § 1026.19(f)(1), the subsequent change requirements of § 1026.19(f)(2), the charges disclosed requirements of § 1026.19(f)(3), the transactions involving a seller requirements of § 1026.19(f)(4), and the fee restriction requirements of § 1026.19(f)(5).

TILA-C 1026.19(g)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.19(g), requires the creditor to provide a consumer in a closed-end consumer credit transaction secured by real property or a cooperative unit, a copy of the special information booklet within the time specified, except as provided in § 1026.19(g)(1)(ii) and (g)(1)(iii).  A creditor is prohibited from making changes to, deletions from, or additions to the special information booklet other than the changes specified in § 1026.19(g)(2)(i) through (g)(2)(iv).

TILA-C 1026.20(a)

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.20(a), requires a creditor to treat a refinancing as a new transaction and provide new disclosures to the consumer.  The new finance charge must include any unearned portion of the old finance charge that is not credited to the existing obligation.

TILA-C 1026.20(b)          

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.20(b), requires that for assumptions of an existing residential mortgage loan, a creditor must make new disclosures to the subsequent consumer, based on the remaining obligation, before the assumption occurs.

TILA-C 1026.20(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.20(c), requires the creditor, assignee, or servicer of a covered adjustable rate mortgage that incurred a payment change because of the adjustment of the interest rate, to provide certain disclosures, in accordance with the timing and content requirements of §1026.20(c)(2) and the formatting requirements described in § 1026.20(c)(3).

TILA-C 1026.20(d)          

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.20(d), requires that, in connection with the initial interest rate adjustment of a covered adjustable rate mortgage, the creditor, assignee, or servicer provide certain disclosures within the prescribed timeframes and in a separate document, in accordance with the content requirements of § 1026.20(d)(2) and the formatting requirements described in § 1026.20(d)(3).

TILA-C 1026.20(e)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.20(e), requires the creditor or servicer to disclose information in accordance with the content requirements of § 1026.20(e)(2), the formatting requirements described in § 1026.20(e)(4), and the timing requirements of § 1026.20(e)(5), for a covered closed-end consumer credit transaction secured by a first lien on real property or a dwelling, other than a reverse mortgage under § 1026.33, for which an escrow account was established and will be cancelled.

TILA-C 1026.21

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.21, requires a creditor to take the actions outlined in § 1026.21(a), (b), and (c), when a credit balance in excess of $1 is created in connection with a transaction.

TILA-C 1026.23(b)          

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.23(b), requires the creditor to deliver two copies of the notice of the right to rescind a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling to each consumer whose ownership interest is or will be subject to the security interest, except for transactions described in § 1026.23(f).  The notice must follow the content and format requirements of  § 1026.23(b).

TILA-C 1026.23(c)-(e)

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.23(c) through (e), requires that a creditor: delay performance of the credit transaction in accordance with the requirements of § 1026.23(c); adhere to the effects of rescission under § 1026.23(d); and permit a consumer’s waiver of the right to rescind in the format outlined under § 1026.23(e).

TILA-C 1026.24(a)-(b)

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.24(a) and (b), requires that if an advertisement states specific credit terms, it shall clearly and conspicuously state only those terms that actually are or will be arranged or offered by the creditor.

TILA-C 1026.24(c)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.24(c), requires that if an advertisement states a rate of finance charge, the rate must be stated as an “annual percentage rate” using that term, and if the rate will increase after consummation, the advertisement must state that fact.  The advertisement cannot state any other rate together with the annual percentage rate (or APR), except as permitted by § 1026.24(c).

TILA-C 1026.24(d)

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.24(d), requires that when the “triggering terms” listed in § 1026.24(d)(1) appear in an advertisement, the disclosures under § 1026.24(d)(2) must also appear, as applicable.

If a catalog or other multiple-page advertisement, or an electronic advertisement (such as an advertisement appearing on an Internet Web site), gives information in a table or schedule in sufficient detail to permit determination of the disclosures required by § 1026.24(d)(2), it shall be considered a single advertisement if it meets the requirements of § 1026.24(e)(1). If a catalog or other multiple-page advertisement or an electronic advertisement (such as an advertisement appearing on an Internet Web site) does not meet the requirements of § 1026.24(e)(2), the advertisement does not comply with § 1026.24(d)(2).

TILA-C 1026.24(f)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.24(f), requires that advertisements (other than television or radio advertisements) for credit secured by a dwelling that state a simple annual rate of interest and more than one simple annual rate of interest will apply over the term of the advertised loan, or that state the amount of any payment, must include the disclosures required under § 1026.24 (f)(2) and (f)(3), and must be made clearly and conspicuously, except that certain envelopes, banners, and pop-up advertisements are excluded as provided under § 1026.24(f)(4).

TILA-C 1026.24(g)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.24(g), requires that an advertisement made through television or radio stating any of the “triggering terms” that require additional disclosures under § 1026.24(d)(2), must comply with the disclosure requirements of § 1026.24(d)(2) by stating in the advertisement, clearly and conspicuously:

(1) each of the additional disclosures required under § 1026.24(d)(2); or

(2) the information required under § 1026.24(d)(2)(iii) and a toll-free telephone number or a reverse charge telephone number referencing that such number may be used by consumers to obtain additional loan cost information.

TILA-C 1026.24(h)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.24(h), requires that when an advertisement for credit secured by the consumer’s principal dwelling and distributed in paper form or through the Internet states that the extension of credit may exceed the fair market value of the dwelling, the advertisement shall clearly and conspicuously disclose that, (1) the interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes; and (2) that the consumer should consult a tax adviser regarding the deductibility of interest and charges.

TILA-C 1026.24(i)            

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.24(i), prohibits, certain acts or practices in advertisements for credit secured by a dwelling, as further outlined under § 1026.24(i)(1) through (i)(7).

Truth in Lending Act/Regulation Z – Subpart D – Miscellaneous

TILA-D 1026.25

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.25, requires, generally, that a creditor retain evidence of compliance with the disclosures in part 1026 for two years after the date they are required to be made or action is required to be taken.  These retention requirements do not apply to the advertising rules under §§ 1026.16 and 1026.24, and longer retention requirements apply to certain sections in part 1026, as provided below.

A creditor is required to retain, and provide copies (as applicable) of, records in the manner specified under § 1026.25(c) that evidence compliance with the requirements of: (1) the early disclosures under § 1026.19(e), and the closing disclosures under § 1026.19(f) for three years after the later of the date of consummation, the date disclosures are required to be made, or the date action is required to be taken, except that the disclosures under § 1026.19(f)(1)(i) or § 1026.19(f)(4)(i) must be retained for five years after consummation; (2) the loan originator compensation under § 1026.36, for three years after the date of payment; and (3) the ability-to-repay provisions under § 1026.43, for three years after the date of consummation of a covered transaction.   

The administrative agencies responsible for enforcing the regulation must be permitted by the creditor to inspect the relevant records to ensure compliance with part 1026.  In addition, such agencies may require creditors under their jurisdictions to retain records for a longer period, if necessary, to carry out their enforcement responsibilities under section 108 of the Act.

TILA-D 1026.26

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.26, requires that, when responding orally to a consumer's inquiry about the cost of credit, the creditor state only rates in terms of the annual percentage rate, except that, for open-end credit a periodic rate or rates may also be stated, and for closed-end credit a simple annual rate or periodic rate may also be stated if applied to an unpaid balance.  Special conditions exist for open-end and closed-end transactions in which the applicable annual percentage rate cannot be determined in advance by the creditor, as provided under § 1026.26.

TILA-D 1026.27

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.27, requires the disclosures required by part 1026, with the exception of advertisements subject to §§ 1026.16 and 1026.24, also be made available in English upon the consumer's request when those disclosures are initially made in a language other than English.

TILA-D 1026.28(a)(2)(i) 

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.28(a)(2)(i), requires that if a creditor gives written notice of a consumer's rights under a state law that provides for a longer period of time for reporting billing errors than that allowed under Federal law with respect to the consumer’s open-end credit account, the notice must include a statement that reliance on the longer time period available for certain actions under state law may result in the loss of important rights that could be preserved by acting more promptly under Federal law.  The notice must also explain when the state law provisions apply; and if applicable, where the state disclosures should appear in relation to the required Federal disclosures, as further provided under § 1026.28(a)(2)(i).

TILA-D 1026.30

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.30, requires the creditor to disclose in any consumer credit contract secured by a dwelling and subject to the Act and part 1026, the maximum interest rate that may be imposed during the term of an obligation when: (a) in the case of closed-end credit, the annual percentage rate may increase after consummation, or (b) in the case of open-end credit, the annual percentage rate may increase during the plan.

Truth in Lending Act/Regulation Z – Subpart E – Special Rules for Certain Home Mortgage Transactions

TILA-E 1026.31(b)            

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.31(b), requires the creditor to make disclosures for certain home mortgage transactions, as outlined in §§ 1026.31 through 1026.45, clearly and conspicuously in writing, and in a form that the consumer can keep.

TILA-E 1026.31(c)(1)      

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.31(c)(1), requires the creditor to provide the high-cost mortgage disclosures required by § 1026.32, at least three business days prior to consummation or account opening.  Any new disclosures provided must be in accordance to the change in terms requirements of § 1026.31(c)(1)(i), and the telephone disclosure requirements of § 1026.31(c)(1)(ii), as applicable.  The consumer may waive the three business day waiting period but must satisfy the requirements outlined in § 1026.31(c)(1)(iii).

TILA-E 1026.31(c)(2)      

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.31(c)(2), requires the creditor to provide the reverse mortgage disclosures required by § 1026.33, at least three business days prior to consummation of a closed-end credit transaction, or the first transaction under an open-end credit plan.

TILA-E 1026.31(d)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.31(d), requires that disclosures for certain home mortgage transactions reflect the terms of the legal obligation between the parties.  If any information for an accurate disclosure is unknown at the time the disclosure is provided, including per-diem interest, the creditor is required to provide the best information reasonably available and clearly state that the disclosure is an estimate.

TILA-E 1026.32(a)(3)      

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.32(a)(3), requires a creditor to determine the annual percentage rate for a closed- or open-end credit high-cost mortgage transaction in accordance with the requirements outlined in § 1026.32(a)(3)(i) through (a)(3)(iii).

TILA-E 1026.32(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.32(c), requires a creditor to provide the high-cost mortgage disclosures in addition to any other disclosures required by Regulation Z, in a conspicuous type size, as outlined in § 1026.32(c)(1) through (c)(5), as applicable.

TILA-E 1026.32(d)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.32(d), prohibits a creditor from using the terms outlined in § 1026.32(d)(1) through (d)(8), for any high-cost mortgage transactions, unless specifically allowed under § 1026.32(d)(1)(ii) and (d)(1)(iii), or (d)(8)(i) through (d)(8)(iii).

TILA-E 1026.33(b)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.33(b), requires a creditor to provide certain disclosures for reverse mortgage transactions in a form substantially similar to the model form found in paragraph (d) of Appendix K. The disclosure must contain the information outlined in § 1026.33(b)(1) through (b)(4).

TILA-E 1026.33(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.33(c), requires a creditor to provide certain disclosures for reverse mortgages related to the projected total cost of credit, in accordance with the information outlined in § 1026.33(c)(1) through (c)(6), as applicable.

TILA-E 1026.34(a)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z 12 C.F.R. § 1026.34(a), prohibits certain acts or practices for high-cost mortgage loans, as outlined in § 1026.34(a)(1) through (a)(10).

TILA-E 1026.34(b)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.34(b), prohibits a creditor from structuring a high-cost mortgage in a form, for the purpose, and with the intent to evade the requirements of Subpart E - Special Rules for Certain Home Mortgage Transactions.

TILA-E 1026.35(b)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.35(b), requires a creditor to establish an escrow account, before consummation, when extending a first-lien higher-priced mortgage loan secured by a consumer’s principal dwelling, unless an exemption in § 1026.35(b)(2) applies.  The creditor may not cancel the escrow account, unless the conditions set forth in § 1026.35(b)(3)(i) and (b)(3)(ii) are satisfied.

TILA-E 1026.35(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.35(c), requires a creditor to obtain appraisals for a higher-priced mortgage loan prior to consummation, unless specifically exempt under § 1026.35(c)(2), following the requirements in § 1026.35(c)(3) through (c)(7).

TILA-E 1026.35(d)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.35(d), prohibits a creditor from structuring credit secured by a consumer’s principal dwelling that does not meet the definition of open-end credit in § 1026.2(a)(20) as an open-end plan to evade the requirements of this section.

TILA-E 1026.36(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(c), requires a creditor to adhere to certain servicing practices for closed-end consumer credit transactions secured by a consumer’s principal dwelling.  The servicer must adhere to the payment processing requirements as outlined in § 1026.36(c)(i) through (c)(iii), not allow for the pyramiding of late fees or delinquency charges as outlined in § 1026.36(c)(2), and provide a payoff statement as outlined under § 1026.36(c)(3).

TILA-E 1026.36(d)(1)      

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(d)(1), prohibits a loan originator from receiving compensation, in connection with a consumer credit transaction secured by a dwelling, in an amount that is based on the terms of a transaction(s), as outlined in § 1026.36(d)(1)(i) through (d)(1)(iv).

TILA-E 1026.36(d)(2)      

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(d)(2), requires, except as provided in § 1026.36(d)(2)(i)(C), that if any loan originator receives compensation directly from a consumer in a consumer credit transaction secured by a dwelling: 1) the loan originator cannot receive compensation, directly or indirectly, from any person other than the consumer in connection with the transaction; and 2) any person who knows or has reason to know of the consumer-paid compensation to the loan originator (other than the consumer) cannot pay any compensation to a loan originator, directly or indirectly, in connection with the transaction.

TILA-E 1026.36(e)(1)        

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(e)(1), prohibits a loan originator from directing or “steering” a consumer to consummate a consumer credit transaction secured by a dwelling based on the fact that the originator will receive greater compensation from the creditor in that transaction than in other transactions the originator could have offered to the consumer, unless the consummated transaction is in the consumer’s interest.

TILA-E 1026.36(f)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(f), requires a loan originator for a consumer credit transaction secured by a dwelling, that is not a government agency or State housing finance agency, to comply with the qualification requirements as outlined in § 1026.36(f)(1) through (f)(3), as applicable.

TILA-E 1026.36(g)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(g), requires a loan originator organization to include the information in § 1026.36(g)(1)(i) and (g)(1)(ii), on all documents described in § 1026.36(g)(2).  The loan originator must do so whenever each loan document is provided to a consumer or presented to a consumer for signature, as applicable.

TILA-E 1026.36(h)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(h), prohibits mandatory arbitration clauses and waivers of certain consumer rights on a contract or other agreement relating to a consumer credit transaction secured by a dwelling, as outlined in § 1026.36(h)(1) and (h)(2).

TILA-E 1026.36(i)            

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(i), prohibits a creditor from financing, directly or indirectly, any premiums or fees for credit insurance in connection with a consumer credit transaction secured by a dwelling.  This prohibition does not apply to credit insurance for which premiums or fees are calculated and paid in full on a monthly basis.

TILA-E 1026.36(j)            

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(j), requires a depository institution to establish and maintain appropriate written policies and procedures reasonably designed to ensure and monitor compliance with the requirements of § 1026.36(d) through (g).

TILA-E 1026.36(k)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.36(k), prohibits a creditor from extending credit to a first-time borrower in connection with a closed-end transaction secured by a dwelling, other than a reverse mortgage transaction subject to § 1026.33 or a transaction secured by a timeshare plan described in 11 U.S.C. § 101(53D) that may result in negative amortization, unless the creditor receives documentation that the consumer has received homeownership counseling as provided under § 1026.36(k)(1).  Furthermore, § 1026.36(k)(3) prohibits a creditor from steering or directing a consumer to choose a particular counselor or counseling organization.

TILA-E 1026.37(a)-(e)     

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.37(a) through (e), requires the creditor to disclose on the Loan Estimate specified information under the headings "General Information," "Loan Terms," "Projected Payments," and "Costs at Closing" for each transaction subject to § 1026.19(e).  The information required under § 1026.37(b) through (d) shall be disclosed under the specified headings and separate tables, and the creditor must include a statement that the consumer may obtain general information and tools at the Web site of the Consumer Financial Protection Bureau, and the link or uniform resource locator address to the Web site:  www.consumerfinance.gov/mortgage-estimate, as required under § 1026.37(e).

TILA-E 1026.37(f)-(j)      

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.37(f) through (j), requires the creditor to disclose on the Loan Estimate under the master heading “Closing Cost Details,” a table with the heading of “Loan Costs,” disclosing the items and amounts described in § 1026.37(f)(1) through (f)(4), in accordance with the requirements of § 1026.37(f)(5) and (f)(6); a table with the heading of “Other Costs,” disclosing the items and amounts described in § 1026.37(g)(1) through (g)(6), in accordance with the requirements of § 1026.37(g)(7) and (g)(8); a table with the heading of “Calculating Cash to Close,” itemizing amounts as required by § 1026.37(h)(1) or (h)(2), as appropriate; and if applicable, an “Adjustable Payment (AP) Table” that meets the requirements of § 1026.37(i) and an “Adjustable Interest Rate (AIR) Table” that meets the requirements of § 1026.37(j).

TILA-E 1026.37(k)-(n)     

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.37(k) through (n), requires the creditor to disclose on the Loan Estimate under the master heading “Additional Information About This Loan,” specific information under the headings “Contact Information,” “Comparisons,” and “Other Considerations.” At the creditor’s option, a signature table to “Confirm Receipt” of the Loan Estimate following the requirements of § 1026.37(n).  These disclosures must contain the information, and be made, as set forth in § 1026.37(k) through (n), as applicable.

TILA-E 1026.37(o)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.37(o), requires the creditor to format the Loan Estimate as outlined under § 1026.37(o)(1) through (o)(4) pertaining to (1) General requirements, (2) Headings and labels, (3) Form, and (4) Rounding, subject only to the exceptions outlined in § 1026.37(o)(5).

TILA-E 1026.38(a)-(d)     

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(a) through (d), requires the creditor to disclose on the Closing Disclosure specific information under the headings “General Information,” “Loan Terms,” “Projected Payments,” and “Costs at Closing” for each transaction subject to § 1026.19(f). These disclosures must contain the information, and be made, as set forth under § 1026.38(b) through (d).

TILA-E 1026.38(e)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(e), requires creditors who provided the optional alternative table pursuant to § 1026.37(h)(2) to disclose the information outlined in § 1026.38(e)(1) through (e)(6) in a separate table on the Closing Disclosure for transactions that do not involve a seller or for simultaneous subordinate financing.  The creditor must label the table under the heading "Calculating Cash to Close" and state, "Use this table to see what has changed from your Loan Estimate."

TILA-E 1026.38(f)-(k)       

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(f) through (k), requires the creditor to disclose on the Closing Disclosure, “Loan Costs,” “Other Costs,” Closing Cost Totals,” “Calculating Cash to Close,” and “Summaries of Transactions,” as applicable, under a heading for “Closing Cost Details.” These disclosures must contain the information, and be made, as set forth under § 1026.38(f) through (k) using the specified headings and tables.

TILA-E 1026.38(l)-(n)      

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(l) through (n), requires the creditor to disclose on the Closing Disclosure under the master heading "Additional Information About This Loan," and under the heading "Loan Disclosures," “Assumption,” “Demand Feature,” “Late Payment,” “Negative Amortization,” “Partial Payment” Policy,” “Security Interest,” and “Escrow Account” information.  These disclosures must contain the information, and be made, as set forth under § 1026.38(l)(1) through (l)(7).  Additionally, if applicable, the table required by § 1026.37(i) under the heading "Adjustable Payment (AP) Table" and the table required by § 1026.37(j) under the heading “Adjustable Interest Rate (AIR) Table” shall also be disclosed.

TILA-E 1026.38(o)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(o), requires the creditor to disclose on the Closing Disclosure under the heading "Loan Calculations," the "Total of Payments," the "Finance Charge," the "Amount Financed," the "Annual Percentage Rate," using that term and the abbreviation "APR" and expressed as a percentage, and the "Total Interest Percentage," using that term and the abbreviation "TIP" and expressed as a percentage.  These disclosures must contain the information, including the statements after each disclosure, as set forth under § 1026.38(o).

TILA-E 1026.38(o); 108(e)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(o), requires the creditor to disclose on the Closing Disclosure under the heading "Loan Calculations," the "Total of Payments," the "Finance Charge," the "Amount Financed," the "Annual Percentage Rate," using that term and the abbreviation "APR" and expressed as a percentage, and the "Total Interest Percentage," using that term and the abbreviation "TIP" and expressed as a percentage.  These disclosures must contain the information, including the statements after each disclosure, as set forth under § 1026.38(o).

Section 108(e)(1) and (e)(2) of the Truth in Lending Act (12 U.S.C. § 1607(e)), requires the FDIC to notify creditors in cases where the finance charge was inaccurately disclosed and to make monetary adjustments to the accounts of consumers in cases where the finance charge has been understated by more than the allowed tolerances as a result of a clear and consistent pattern or practice of violations, gross negligence, or a willful violation which was intended to mislead the person to whom the credit was extended, unless an exception under this section applies.

TILA-E 1026.38(p)-(s)     

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(p) through (s), requires the creditor to disclose on the Closing Disclosure specific information under the headings “Other Disclosures,” “Questions?” and "Contact Information."  At the creditor’s option, the Closing Disclosure may include a signature table to “Confirm Receipt” by the applicant(s), which shall follow the requirements of § 1026.38(s).  These disclosures must contain the information, and be made, as set forth in § 1026.38(p) through (s), as applicable.

TILA-E 1026.38(t)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.38(t), requires the creditor to format the Closing Disclosure as outlined under § 1026.38(t)(1) through (t)(4) pertaining to (1) General requirements, (2) Headings and labels, (3) Form, and (4) Rounding, subject only to the exceptions outlined in § 1026.38(t)(5).

TILA-E 1026.39

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.39, requires a covered person, as defined in § 1026.39(a), to provide certain disclosures to the consumer on or before the 30th calendar day following the date of a mortgage purchase, assignment, or transfer as outlined in § 1026.39(b)(1) through (b)(5). These disclosures are not required with respect to a particular mortgage loan if one of the exceptions under § 1026.39(c) apply.  The disclosure must comply with the content requirements outlined in § 1026.39(d)(1) through (d)(5).

TILA-E 1026.40(a)-(b)      

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.40(a) and (b), requires that the home equity credit plan disclosures under § 1026.40(d) follow the form of disclosure requirements as outlined under § 1026.40(a)(1) through (a)(3) and the timing requirements outlined under § 1026.40(b).  The brochure required under § 1026.40(e), must also follow the timing requirements under § 1026.40(b).

TILA-E 1026.40(d)-(e)       

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.40(d) and (e), requires the creditor to provide home equity credit plan disclosures related to the following, as applicable: (1) Retention of information, (2) Conditions for disclosed terms, (3) Security interest and risk to home, (4) Possible actions by creditor, (5) Payment terms, (6) Annual percentage rate, (7) Fees imposed by creditor, (8) Fees imposed by third parties to open a plan, (9) Negative amortization, (10) Transaction requirements, (11) Tax implications, and (12) Disclosures for variable-rate plans.  In addition, the home-equity brochure entitled “What You Should Know About Home Equity Lines of Credit” or a suitable substitute shall be provided as required by § 1026.40(e).

TILA-E 1026.40(f)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.40(f), requires creditors to adhere to limitations on home equity credit plans pertaining to (1) Changing the annual percentage rate, (2) Terminating a plan, (3) Changing terms, and (4) Terminating reverse mortgages subject to § 1026.33.

TILA-E 1026.40(g)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.40(g), requires the creditor to refund all fees paid by the consumer to anyone in connection with a home equity credit plan application if any term required to be disclosed under § 1026.40(d) changes (other than a change due to fluctuations in the index in a variable-rate plan) before the plan is opened and, as a result, the consumer elects not to open the plan.

TILA-E 1026.40(h)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.40(h), prohibits a creditor from imposing a nonrefundable fee in connection with an application until three business days after the consumer receives the home equity credit plan disclosures and brochure required under this section.

TILA-E 1026.41(a)-(d)    

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.41(a) through (d), requires a servicer of closed-end consumer credit transactions secured by a dwelling to comply with the periodic statement requirements pertaining to (a) General requirements, (b) Timing, (c) Form, and (d) Content and layout.

TILA-E 1026.42(c)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.42(c), requires that a covered person, in connection with a covered transaction, as these terms are defined in this section, not base the valuation of a consumer’s principal dwelling on any of the prohibited practices outlined in § 1026.42(c)(1) and (c)(2) pertaining to (1) Coercion and (2) Mischaracterization of value.

TILA-E 1026.42(d)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.42(d), prohibits conflicts of interest in the preparation of a valuation or performance of valuation management functions, in connection with covered transactions as defined in this section.  Subsections 1026.42(d)(2) through (d)(4) provide standards for compliance for employees and affiliates of creditors, based on asset size from the past two calendar years, and for providers of multiple settlement services.

TILA-E 1026.42(e)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.42(e), prohibits creditors, in connection with a covered transaction as defined in this section, from extending credit based on a valuation which the creditor knew, at or before consummation, violated § 1026.42(c) or (d), unless the creditor documents that it has acted with reasonable diligence to determine that the valuation does not materially misstate or misrepresent the value of the consumer’s principal dwelling.

TILA-E 1026.42(f)(1)        

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.42(f)(1), requires that the creditor and its agents compensate a fee appraiser for performing appraisal services in covered transactions, as defined by this section, at a rate that is customary and reasonable for comparable appraisal services performed in the geographic market of the property being appraised.

TILA-E 1026.42(g)             

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.42(g), requires any covered person, as defined in this section, to report within a reasonable time to the appropriate state agency an appraiser that has materially failed to comply with the Uniform Standards of Professional Appraisal Practice or ethical or professional requirements for appraisers under applicable state or federal law or regulations.  A material failure to comply exists if it is likely to significantly affect the value assigned to the consumer’s principal dwelling.   

TILA-E 1026.43(c)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.43(c), requires a creditor, in connection with a covered transaction as defined in this section, to make a reasonable and good faith determination, at or before consummation, that a consumer will have a reasonable ability to repay the loan, unless an exception applies under § 1026.43(d) through (f).  A creditor must consider the factors set forth in § 1026.43(c)(2) through (c)(7) to make an ability to repay determination.

TILA-E 1026.43(g)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.43(g), requires a creditor to comply with the prepayment penalty requirements outlined under § 1026.43(g)(1) through (g)(5), for covered transactions defined in this section.

TILA-E 1026.43(h)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.43(h), prohibits a creditor from structuring credit secured by a consumer’s dwelling that does not meet the definition of open-end credit in § 1026.2(a)(20) as an open-end plan to evade the requirements of this section.

Truth in Lending Act/Regulation Z – Subpart F – Special Rules for Private Education Loans

TILA-F 1026.46(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.46(c), requires creditors to make private education loan disclosures covered by Subpart F to be made clearly and conspicuously, and in accordance with the disclosure requirements of § 1026.46(c)(2), and as applicable, with the electronic disclosure requirements of § 1026.46(c)(3).

TILA-F 1026.46(d)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.46(d), requires a creditor to disclose private education loan information for applications or solicitations under § 1026.47(a), approvals under § 1026.47(b), and acceptance under § 1026.47(c), based on the timing requirements and contingencies specified under § 1026.46(d).

TILA-F 1026.46(e)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.46(e), requires private education loan disclosures to reflect the terms of the legal obligation between the parties.  If any information necessary for an accurate disclosure is unknown to the creditor, the creditor must make the disclosure based on the best information reasonably available at the time the disclosure is provided, and must clearly state that the disclosure is an estimate.

TILA-F 1026.46(f)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.46(f), requires that if a transaction involves more than one creditor, only one set of private education loan disclosures will be given.  The creditors must agree among themselves which creditor will comply with the requirements that this part imposes on any or all of them.

TILA-F 1026.47(a)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.47(a), requires a creditor to provide certain disclosures on or with a solicitation or an application for a private education loan, except as provided for under § 1026.46(d)(1)(iii) for loans with multiple purposes.  As applicable, the disclosures must contain the information outlined under § 1026.47(a)(1) through (a)(8).

TILA-F 1026.47(b)            

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.47(b), requires a creditor to provide certain disclosures for private education loans on or with any notice of approval provided to the consumer.  The disclosure must contain information required under § 1026.18 and the information outlined under § 1026.47(b)(1) through (b)(5).

TILA-F 1026.47(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.47(c), requires a creditor to provide certain disclosures for private education loans after the consumer has accepted the loan in accordance with the requirements of § 1026.48(c)(1). The loan acceptance disclosures must contain the information required under § 1026.18 and the information outlined under § 1026.47(c)(1) through (c)(4).

TILA-F 1026.48(a)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z 12 C.F.R. §1026.48(a), prohibits a creditor, other than the educational institution itself, from marketing educational loans using an educational institution’s identifying characteristics, including name, logo, mascot, and symbols in a way that implies that the covered educational institution endorses the creditor’s loans, unless, as permitted by § 1026.48(b), the creditor and the educational institution have entered into an arrangement where the educational institution agrees to endorse the creditor’s private education loans, such an arrangement is not prohibited by other applicable law or regulation, and the marketing includes a disclosure in the manner required under § 1026.48(b) that the creditor, not the educational institution, is making the loan.

TILA-F 1026.48(c)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.48(c), requires the creditor to honor a consumer’s right to accept the terms of a private education loan at any time within 30 calendar days following the date on which the consumer receives the disclosures required under § 1026.47(b).  Unless specifically permitted in § 1026.48(c)(3) or (c)(4), the creditor is prohibited from changing the rate and terms of the private education loan that are required to be disclosed under § 1026.47(b) and (c) prior to the earlier of the timeframes outlined in § 1026.48(c)(2)(i) and (c)(2)(ii).

TILA-F 1026.48(d)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.48(d), requires the creditor to honor a consumer’s right to cancel a private education loan, without penalty, until midnight of the third business day following the date on which the consumer receives the disclosures required by § 1026.47(c).  The creditor is prohibited from disbursing the funds of a private education loan until the three-business day period has expired.

TILA-F 1026.48(e)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.48(e), requires that prior to consummating a private education loan, a creditor obtain from the consumer or the institution of higher education the private education loan self-certification form developed by the Secretary of Education, signed by the consumer, in written or electronic form.

TILA-F 1026.48(f)           

The Truth in Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.48(f), requires that a creditor with a preferred lender arrangement provide to the covered educational institution the information required under § 1026.47(a)(1) through (a)(5), for each type of private education loan the lender plans to offer to consumers for students attending the covered educational institution for the period beginning July 1 of the current year and ending June 30 of the following year.  The creditor must provide the information annually, within the timeframes outlined in this section.

Truth in Lending Act/Regulation Z – Subpart G – Special Rules Applicable to Credit Card Accounts and Open-End Credit Offered to College Students

TILA-G 1026.51(a)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.51(a), prohibits a card issuer from opening a credit card account for a consumer under an open-end (not home-secured) consumer credit plan, or increasing any credit limit applicable to such account, unless the card issuer considers the consumer’s ability to repay to make the required minimum payment under the terms of the account and establishes and maintains reasonable policies and procedures to consider the consumer’s ability to repay as outlined under § 1026.51(a)(1)(i) through (a)(1)(ii).  A creditor must use a reasonable method for estimating the minimum periodic payments the consumer would be required to pay under the terms of the account as outlined in § 1026.51(a)(2).

TILA-G 1026.51(b)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.51(b), prohibits a creditor from opening a credit card account under an open-end (not home-secured) consumer credit plan for a consumer less than 21 years old, unless the consumer has submitted a written application and the card issuer has complied with § 1026.51(b)(1)(i) or (b)(1)(ii), as applicable.  A creditor cannot increase the credit limit on a credit card account opened pursuant to § 1026.51(b)(1) before the consumer is 21years old unless it follows the requirements of § 1026.51(b)(2)(i) or (b)(2)(ii), as applicable.

TILA-G 1026.52(a)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.52(a), requires that the total amount of fees a consumer pays on a credit card account under an open-end (not home-secured) consumer credit plan during the first year after account opening must not exceed 25 percent of the credit limit in effect when the account is opened, except that this limitation does not apply to fees listed under § 1026.52(a)(2).

TILA-G 1026.52(b)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.52(b), prohibits a card issuer from imposing a fee for violating the terms or other requirements of a credit card account under an open-end (not home-secured) consumer credit plan unless the dollar amount of the fee is consistent with § 1026.52(b)(1) through (b)(2).

TILA-G 1026.53

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.53, requires that when a consumer makes a payment in excess of the required minimum payment for a credit card account under an open-end (not home-secured) consumer credit plan, the creditor must allocate the excess payment as specified by § 1026.53(a), except as provided under § 1026.53(b).

TILA-G 1026.54

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.54, prohibits the card issuer from imposing finance charges as a result of the loss of a grace period on a credit card account under an open-end (not home-secured) consumer credit plan if those finance charges are based on: (i) balances for days in billing cycles that precede the most recent billing cycle; or (ii) any portion of a balance subject to a grace period that was repaid prior to the expiration of the grace period, except as provided for under § 1026.54(b).

TILA-G 1026.55(a)-(b)      

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.55(a) and (b), prohibits a card issuer from increasing an annual percentage rate or a fee, or a charge required to be disclosed under § 1026.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii) on a credit card account under an open-end (not home-secured) consumer credit plan, except as provided in § 1026.55(b).

TILA-G 1026.55(c)(2)     

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.55(c)(2), prohibits a card issuer from requiring repayment of the protected balance using a method that is less beneficial to the consumer than one of the methods outlined in § 1026.55(c)(2)(i) through (c)(2)(iii).

TILA-G 1026.56(b)(1)

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.56(b)(1), prohibits a card issuer from assessing a fee or charge on a consumer’s credit card account under an open-end (not home-secured) consumer credit plan for an over-the-limit transaction unless the card issuer complies with §1026.56(b)(1)(i) through (b)(1)(v).

TILA-G 1026.56(c)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.56(c), requires a card issuer who permits a consumer to consent to the card issuer’s payment of any over-the-limit transaction in writing, orally, or electronically, to also permit the consumer to revoke his or her consent using the same methods available to the consumer for providing consent.

TILA-G 1026.56(d)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.56(d), requires the card issuer to follow the timing and placement requirements of notices as outlined in § 1026.56(d)(1) through (d)(3) regarding the (1) Initial notice, (2) Confirmation of opt-in, and (3) Notice of right of revocation.

TILA-G 1026.56(e)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.56(e), requires the card issuer to comply with the content requirements for the initial notice and subsequent notice as outlined in § 1026.56(e)(1) through (e)(2).

TILA-G 1026.56(f)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.56(f), requires that if two or more consumers are jointly liable on a credit card account under an open-end (not home-secured) consumer credit plan, the card issuer shall treat the affirmative consent of any of the joint consumers as affirmative consent for that account.  Similarly, the card issuer shall treat a revocation of consent by any of the joint consumers as revocation of consent for that account.

TILA-G 1026.56(i)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.56(i), requires a card issuer to comply with a consumer’s revocation request as soon as reasonably practicable after the card issuer receives it.

TILA-G 1026.56(j)           

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.56(j), prohibits a card issuer, notwithstanding a consumer’s affirmative consent to a card issuer’s payment of over-the-limit transactions, from imposing over-the-limit fees or charges in excess of one per cycle (unless the exception of § 1026.56(j)(1)(ii) applies) or solely because of the creditor’s failure to promptly replenish the credit limit.  A creditor is also prohibited from conditioning a credit limit on whether a consumer provided affirmative consent, and charging over-the-limit fees attributed to fees or interest charged by the cardholder.   

TILA-G 1026.57(b)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.57(b), requires an institution of higher education to publicly disclose any contract or other agreement made with a card issuer or creditor for the purpose of marketing a credit card to college students.

TILA-G 1026.57(c)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.57(c), prohibits a card issuer from offering a college student any tangible item to induce such student to apply for or open an open-end consumer credit plan offered by such card issuer or creditor, if such offer is made: (1) on a campus of the institution of higher education; (2) near the campus of an institution of higher education; or (3) at an event sponsored by, or related to, an institution of higher education.

TILA-G 1026.57(d)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.57(d), requires a card issuer that was party to one or more college credit card agreements in effect at any time during a calendar year to submit to the Consumer Financial Protection Bureau (CFPB) an annual report regarding those agreements in the form and manner prescribed by the CFPB.  The card issuer must include in the annual report the required contents described in § 1026.57(d)(2) and must adhere to the timing requirements prescribed in § 1026.57(d)(3).

TILA-G 1026.58(c)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.58(c), requires an issuer of credit cards under an open-end (not home-secured) consumer credit plan to comply with the submission of credit card agreements to the Consumer Financial Protection Bureau as outlined in § 1026.58(c)(1) through (c)(8), unless an exception applies.

TILA-G 1026.58(d)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.58(d), requires an issuer of credit cards under an open-end (not home-secured) consumer credit plan to post its credit card agreements on its publicly available Web site as outlined in § 1026.58(d)(1) through (d)(4).

TILA-G 1026.58(e)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.58(e), requires an issuer of credit cards under an open-end (not home-secured) consumer credit plan to comply with the agreement requirements for all open accounts as outlined in § 1026.58(e)(1) through (e)(3).

TILA-G 1026.59

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.59, requires an issuer of credit cards under an open-end (not home-secured) consumer credit plan to comply with the requirements of § 1026.59(a)(1) for the evaluation of increased rates and § 1026.59(a)(2) for rate reductions.  In addition, card issuers must comply with the requirements for the evaluation of rate increases as specified in § 1026.59(b) through (h), including, written policies and procedures, timing, review of factors considered in determining the applicable annual percentage rate, rate increases due to delinquency, and the rules for acquired credit card accounts.

TILA-G 1026.60(a)          

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.60(a), requires the card issuer to provide the disclosures required under this section on or with a solicitation or an application to open a credit or charge card account.  These disclosures shall follow the format specified under § 1026.60(a)(2) and follow the requirements of § 1026.60(a)(4) for fees that can vary by state.

TILA-G 1026.60(b)-(f)    

The Truth-in-Lending Act (15 U.S.C. § 1601 et seq.), as implemented by Regulation Z, 12 C.F.R. § 1026.60(b) through (f), requires the card issuer to disclose the items in these subsections, unless an exception applies, on or with an application or a solicitation to open a credit or charge card account.

TILA-G 1026.61(b)           

The Truth in Lending Act (15 U.S.C. § 1601 et. seq.), as implemented by Regulation Z, § 1026.61(b), prohibits a hybrid prepaid-credit card issuer from structuring the credit feature as a negative balance on the asset feature of a prepaid account.  Instead, the credit feature must be structured as a separate credit feature, as described in this subsection.

TILA-G 1026.61(c)

The Truth in Lending Act (15 U.S.C. § 1601 et. seq.), as implemented by Regulation Z, § 1026.61(c), prohibits a card issuer from engaging in the activities in § 1026.61(c)(1)(i) through (c)(1)(iii), with respect to a covered separate feature that could be accessible at any point by a hybrid prepaid-credit card, until 30 days after the prepaid account has been registered.

Truth in Savings Act/Regulation DD

TISA 1030.3        

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.3, requires a financial institution to make disclosures required by §§ 1030.4 through 1030.6 of this part, as applicable, clearly and conspicuously, in writing, and in a form the consumer may keep.  The disclosures should also meet the requirements of § 1030.3(b) through (f) regarding the terms of the legal obligation; responding to oral inquiries; and the rounding and accuracy rules for rates and yields.  Disclosures required by, and provided in accordance with, the Electronic Funds Transfer Act and its implementing Regulation E, that are also required by this part may be substituted for the disclosures required by this part.

TISA 1030.4(a)-(b)           

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.4(a) and (b), requires a financial institution to provide account disclosures to a consumer before an account is opened or a service provided, whichever is earlier, and to provide account disclosures to a consumer upon request.  The account disclosures must contain the information required by § 1030.4(b).

TISA 1030.5(a) 

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.5(a), requires a financial institution to provide advance notice to affected consumers of any change in terms required to be disclosed under § 1030.4(b), if the change reduces the annual percentage yield or adversely affects the consumer, except as permitted under § 1030.5(a)(2).  The notice must include the effective date of the change, and be mailed or delivered at least 30 calendar days before the effective date of the change.

TISA 1030.5(b)-(c)           

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.5(b) and (c), requires a financial institution to provide disclosures before maturity, by disclosing specific information for time accounts longer than one month that renew automatically; and time accounts longer than one year that do not renew automatically.  These disclosures must be provided in accordance with the content and timing requirements of subsections (b) and (c).

TISA 1030.6      

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.6, requires a financial institution to provide certain periodic statement disclosures.  Section 1030.6(a) requires a financial institution that mails or delivers a periodic statement to include disclosures of the annual percentage yield earned; amount of interest; fees imposed; length of the statement period; and total overdraft and returned item fees as required by § 1030.11(a). The institution must also meet the requirements of § 1030.6(b) when the financial institution uses the average daily balance method and calculates interest for a period other than the statement period.

TISA 1030.7      

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.7, requires a financial institution to calculate interest on the full amount of principal in an account each day using permissible methods, and to use the same method in determining any minimum balance to earn interest.  This section also requires that interest begin to accrue not later than the business day specified for interest-bearing accounts as set out in the Expedited Funds Availability Act (12 U.S.C. § 4005) and its implementing Regulation CC (12 C.F.R. part 229).

TISA 1030.8(a)

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.8(a), prohibits a financial institution from advertising in a way that is misleading or inaccurate, or that misrepresents an institution’s deposit contract.  An institution’s advertisements cannot refer to, or describe, an account as “free” or “no cost” (or contain a similar term), if any maintenance activity fee may be imposed on the account, or use the word “profit” in referring to interest paid on an account.

TISA 1030.8(b)-(c)           

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.8(b) and (c), requires that, if a financial institution advertises a rate of return, the advertisement state the rate as an “annual percentage yield” using that term (the abbreviation APY may be used as long as “annual percentage yield” is used at least once in the advertisement).  The only other rate that may be stated is "interest rate" if not more conspicuous than the annual percentage yield to which it is related.  In addition, except as provided by § 1030.8(e), if the financial institution advertises the annual percentage yield, the advertisement must clearly and conspicuously state information, as applicable, regarding variable rates; the time the annual percentage yield is offered; any minimum balance and minimum opening deposit requirements; the effect of any fees; and the features of time accounts.   

TISA 1030.8(d) 

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.8(d), requires that, except as provided by § 1030.8(e), if a financial institution advertises a bonus, the advertisement must clearly and conspicuously state the “annual percentage yield,” using that term; the time requirement to obtain the bonus; the minimum balance required to obtain the bonus; the minimum balance required to open the account; and when the bonus will be provided.

TISA 1030.9(c)  

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.9(c), requires a financial institution to retain evidence of compliance with the requirements of part 1030 for a minimum of two years after the date disclosures are required to be made or action is required to be taken.

TISA 1030.11(a)

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.11(a), requires a financial institution to separately disclose on each periodic statement, as applicable, the total dollar amount for all fees or charges imposed on the account for paying checks or other items when there are insufficient or unavailable funds and the account becomes overdrawn, using the term “Total Overdraft Fees;” and the total dollar amount for all fees or charges imposed on the account for returning items unpaid.  These fee disclosures must be provided for the statement period and for the calendar year-to-date, using the format requirements of § 1030.11(a)(3).

TISA 1030.11(b)

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.11(b), requires a financial institution to disclose in a clear and conspicuous manner in any advertisement promoting the payment of overdrafts, except as provided in § 1030.11(b)(2) through (b)(4), the fee(s) for payment of each overdraft; the categories of transactions for which a fee for paying an overdraft may be imposed; the time period by which the consumer must repay or cover any overdraft; and the circumstances under which the institution will not pay an overdraft.

TISA 1030.11(c)

The Truth in Savings Act (12 U.S.C. § 4301 et seq.), as implemented by Regulation DD, 12 C.F.R. § 1030.11(c), prohibits a financial institution from disclosing balance information to a consumer through an automated system that includes “additional amounts” that the institution may provide to cover an item when there are insufficient or unavailable funds in the consumer’s account, whether under a discretionary service, a service subject to Regulation Z (12 C.F.R. part 1026), or a service to transfer funds from another account of the consumer.  A financial institution may, at its option, disclose additional balances that include such additional amounts if the institution prominently states that balances include the additional amounts and, if applicable, that the amounts are not available for all transactions.

Unfair & Deceptive Acts or Practices (Section 5 of FTC Act)

UDAP Section 5(No Subsection–Unfair)     

Section 5 of the Federal Trade Commission Act of 1914 (15 U.S.C. § 45) prohibits unfair acts or practices.  An act or practice is “unfair” where it (1) causes or is likely to cause substantial injury to consumers; (2) cannot be reasonably avoided by consumers; and (3) is not outweighed by countervailing benefits to consumers or to competition.  Public policy may also be considered in the analysis of whether a particular act or practice is unfair.

UDAP Section 5(No Subsection–Deceptive)

Section 5 of the Federal Trade Commission Act of 1914 (15 U.S.C. § 45) prohibits deceptive acts or practices.  To determine whether a representation, omission, or practice is “deceptive,” a three-part test is used.  First, the representation, omission, or practice must mislead or be likely to mislead the consumer.  Second, the consumer’s interpretation of the representation, omission, or practice must be reasonable under the circumstances.  Lastly, the misleading representation, omission, or practice must be material.

Unfair, Deceptive, Abusive Acts or Practices (Section 1036 of Dodd-Frank Wall Street Reform and Consumer Protection Act)

Note: This category only includes the violation code for abusive.  See the UDAP category for the deception and unfairness violation codes.

UDAAP Section 1036(a)(1)(B)

Section 1036(a)(1)(B) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (12 U.S.C. § 5536(a)(1)(B)) prohibits any covered person or service provider from engaging in, among other things, abusive acts or practices in connection with a consumer financial product or service.  As provided in section 1031(d) of the Act, an act or practice is abusive if it: (1) materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or (2) takes unreasonable advantage of: (A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; (B) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or (C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.

[UDAAP Section 1036(a)(1)(B)]

Back To Top

The Complex Bank Supervision Program (Program) is a continuous supervisory strategy for institutions that exhibit elevated or unique risks of consumer harm.  These institutions often employ complex business models, offer nontraditional products/services, and/or rely heavily on third-party relationships. The Program involves:

• A tailored supervisory strategy specific to an institution’s risk profile;
• Two-way, proactive communication between the institution and examination staff;
• An examiner serving as a primary contact who responds to regulatory questions, provides feedback, and clarifies guidance;
• Effective collaboration with bank management to identify potential risks earlier than point-in-time examinations, and to address and mitigate issues with the potential for significant consumer harm;
• An aligned supervisory approach with the Division of Risk Management Supervision; and
• Coordinated supervision with other regulators.

The Program consists of a three-tiered supervisory approach based on an institution’s risk profile and may include ongoing monitoring, risk assessments, supervisory plans, targeted reviews, and dedicated/designated staff.  For each tier, examiners create a supervisory strategy tailored to the institution that recognizes the unique characteristics of the business model and product offerings. Institutions with total assets of $10 billion or more are generally included in the Program.  Institutions with assets less than $10 billion that exhibit elevated risk may also be included in the Program to ensure appropriate supervisory oversight.

• Tier I institutions pose elevated risk that warrant additional supervisory oversight.  Generally, all institutions with assets of $10 billion or more will be assigned to this tier.  The supervisory approach for Tier I institutions includes assigning a point of contact (POC) and generally conducting annual risk assessments. Consideration for targeted visits or other interim supervisory activities will be based on the outcome of the risk assessments.  The regular examination frequency and traditional examination procedures apply to these institutions.  POCs will communicate to bank management the results of the risk assessment and any targeted reviews or interim supervisory activities.
• Tier II institutions exhibit a higher risk for consumer harm due to a variety of factors.  These may include a significant third-party reliance, nontraditional business model, complex corporate governance or organizational structure, predominant use of technology for product delivery, national customer base, or a historically high volume of consumer complaints.  In addition to targeted supervisory activities, the regular examination frequency applies to Tier II institutions.  A designated examiner in charge (EIC) will be assigned to Tier II institutions.  The EIC assesses the risk of the institution, determines the supervisory strategy, establishes the scope of each supervisory activity, and provides a Planned Supervisory Activities letter to the institution’s Board of Directors that summarizes the upcoming supervisory events.  Staff will communicate supervisory findings at the conclusion of any supervisory activity with the institution's management and/or Board of Directors.
• Tier III institutions pose the highest risk of consumer harm.  These institutions exhibit many characteristics of Tier II banks.  Furthermore, the operations of institutions in this tier are of such magnitude, they pose the greatest risk of widespread consumer harm and require dedicated oversight. In addition to targeted supervisory activities, the regular examination frequency applies to Tier III institutions. Tier III institutions will be supervised by a dedicated EIC and a dedicated team member(s). The EIC assesses the risk of the institution, determines the supervisory strategy, establishes the scope of each targeted supervisory activity, and provides a Planned Supervisory Activities letter to the institution’s Board of Directors that briefly summarizes the upcoming supervisory events.   Staff will communicate supervisory findings at the conclusion of any supervisory activity with the institution's management and/or Board of Directors.

Introduction

This overview provides a basic and abbreviated discussion of federal fair lending laws and regulations. It is adapted from the Interagency Policy Statement on Fair Lending issued in March 1994.

Lending Discrimination Statutes and Regulations

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction. It applies to any extension of credit, including extensions of credit to small businesses, corporations, partnerships, and trusts.

The ECOA prohibits discrimination based on:

• Race or color;
• Religion;
• National origin;
• Sex;
• Marital status;
• Age (provided the applicant has the capacity to contract);
• The applicant’s receipt of income derived from any public assistance program; or
• The applicant’s exercise, in good faith, of any right under the Consumer Credit Protection Act.

The Consumer Financial Protection Bureau’s Regulation B, found at 12 CFR part 1002, implements the ECOA. Regulation B describes lending acts and practices that are specifically prohibited, permitted, or required. Official staff interpretations of the regulation are found in Supplement I to 12 CFR part 1002 .

The Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 further amended the ECOA and covers:

• Data collection for loans to minority-owned and women-owned businesses (awaiting final regulation);
• Legal action statute of limitations for ECOA violations is extended to five years (effective July 21, 2010); and
• A disclosure of the consumer’s ability to receive a copy of any appraisal(s) and valuation(s) prepared in connection with first-lien loans secured by a dwelling is to be provided to applicants within 3 business days of receiving the application (effective January 18, 2014).

NOTE: Further information regarding the technical requirements of fair lending are incorporated into the sections ECOA V 7.1 and FCRA VIII 6.1 of this manual.

The Fair Housing Act (FHAct) prohibits discrimination in all aspects of “residential real-estate related transactions,” including but not limited to:

• Making loans to buy, build, repair, or improve a dwelling;
• Purchasing real estate loans;
• Selling, brokering, or appraising residential real estate; or
• Selling or renting a dwelling.

The FHAct prohibits discrimination based on:

• Race or color;
• National origin;
• Religion;
• Sex;
• Familial status (defined as children under the age of 18 living with a parent or legal custodian, pregnant women, and people securing custody of children under 18); or
• Handicap.

The Department of Housing and Urban Development’s (HUD) regulations implementing the FHAct are found at 24 CFR Part 100. Because both the FHAct and the ECOA apply to mortgage lending, lenders may not discriminate in mortgage lending based on any of the prohibited factors in either list.

Under the ECOA, it is unlawful for a lender to discriminate on a prohibited basis in any aspect of a credit transaction, and under both the ECOA and the FHAct, it is unlawful for a lender to discriminate on a prohibited basis in a residential real-estate-related transaction. Under one or both of these laws, a lender may not, because of a prohibited factor:

• Fail to provide information or services or provide different information or services regarding any aspect of the lending process, including credit availability, application procedures, or lending standards.
• Discourage or selectively encourage applicants with respect to inquiries about or applications for credit.
• Refuse to extend credit or use different standards in determining whether to extend credit.
• Vary the terms of credit offered, including the amount, interest rate, duration, or type of loan.
• Use different standards to evaluate collateral.
• Treat a borrower differently in servicing a loan or invoking default remedies.
• Use different standards for pooling or packaging a loan in the secondary market.

A lender may not express, orally or in writing, a preference based on prohibited factors or indicate that it will treat applicants differently on a prohibited basis. A violation may still exist even if a lender treated applicants equally.

A lender may not discriminate on a prohibited basis because of the characteristics of

• An applicant, prospective applicant, or borrower.
• A person associated with an applicant, prospective applicant, or borrower (for example, a co-applicant, spouse, business partner, or live-in aide).
• The present or prospective occupants of either the property to be financed or the characteristics of the neighborhood or other area where property to be financed is located.

Finally, the FHAct requires lenders to make reasonable accommodations for a person with disabilities when such accommodations are necessary to afford the person an equal opportunity to apply for credit.

Types of Lending Discrimination

The FDIC evaluates potential discrimination under the ECOA and the FHAct through:

• Overt evidence of disparate treatment; or
• Comparative evidence of disparate treatment

Disparate Treatment

The existence of illegal disparate treatment may be established either by statements revealing that a lender explicitly considered prohibited factors (overt evidence) or by differences in treatment that are not fully explained by legitimate nondiscriminatory factors (comparative evidence).

Overt Evidence of Disparate Treatment. There is overt evidence of discrimination when a lender openly discriminates on a prohibited basis.

Example: A lender offered a credit card with a limit of up to $750 for applicants aged 21-30 and $1500 for applicants over 30. This policy violated the ECOA’s prohibition on discrimination based on age.

There is overt evidence of discrimination even when a lender expresses — but does not act on — a discriminatory preference:

Example: A lending officer told a customer, “We do not like to make home mortgages to Native Americans, but the law says we cannot discriminate and we have to comply with the law.” This statement violated the FHAct’s prohibition on statements expressing a discriminatory preference as well as Section 1002.4(b) of Regulation B, which prohibits discouraging applicants on a prohibited basis.

Comparative Evidence of Disparate Treatment. Disparate treatment occurs when a lender treats a credit applicant differently based on one of the prohibited bases. It does not require any showing that the treatment was motivated by prejudice or a conscious intention to discriminate against a person beyond the difference in treatment itself.

Disparate treatment may more likely occur in the treatment of applicants who are neither clearly well-qualified nor clearly unqualified. Discrimination may more readily affect applicants in this middle group for two reasons. First, if the applications are “close cases,” there is more room and need for lender discretion. Second, whether or not an applicant qualifies may depend on the level of assistance the lender provides the applicant in completing an application. The lender may, for example, propose solutions to credit or other problems regarding an application, identify compensating factors, and provide encouragement to the applicant. Lenders are under no obligation to provide such assistance, but to the extent that they do, the assistance must be provided in a nondiscriminatory way.

Example: A non-minority couple applied for an automobile loan. The lender found adverse information in the couple’s credit report. The lender discussed the credit report with them and determined that the adverse information, a judgment against the couple, was incorrect because the judgment had been vacated. The non-minority couple was granted their loan. A minority couple applied for a similar loan with the same lender. Upon discovering adverse information in the minority couple’s credit report, the lender denied the loan application on the basis of the adverse information without giving the couple an opportunity to discuss the report.

The foregoing is an example of disparate treatment of similarly situated applicants, apparently based on a prohibited factor, in the amount of assistance and information the lender provided.

If a lender has apparently treated similar applicants differently on the basis of a prohibited factor, it must provide an explanation for the difference in treatment. If the lender’s explanation is found to be not credible, the agency may find that the lender discriminated.

Redlining is a form of illegal disparate treatment in which a lender provides unequal access to credit, or unequal terms of credit, because of the race, color, national origin, or other prohibited characteristic(s) of the residents of the area in which the credit seeker resides or will reside or in which the residential property to be mortgaged is located. Redlining may violate both the FHAct and the ECOA.

General Guidelines

These procedures are intended to be a basic and flexible framework to be used in the majority of fair lending examinations conducted by the FFIEC agencies. They are also intended to guide examiner judgment, not to supplant it. The procedures can be augmented by each agency as necessary to ensure their effective implementation. While these procedures apply to many examinations, agencies routinely use statistical analyses or other specialized techniques in fair lending examinations to assist in evaluating whether a prohibited basis was a factor in an institution’s credit decisions. Examiners should follow the procedures provided by their respective agencies in these cases.

For a number of aspects of lending — for example, credit scoring and loan pricing — the “state of the art” is more likely to be advanced if the agencies have some latitude to incorporate promising innovations. These interagency procedures provide for that latitude.

Any references in these procedures to options, judgment, etc., of “examiners” means discretion within the limits provided by that examiner’s agency. An examiner should use these procedures in conjunction with his, or her, own agency’s priorities, examination philosophy, and detailed guidance for implementing these procedures. These procedures should not be interpreted as providing the examiner greater latitude than his, or her, own agency would. For example, if an agency’s policy is to review compliance management systems in all of its institutions, an examiner for that agency must conduct such a review rather than interpret Part II of these interagency procedures as leaving the review to the examiner’s option.

The procedures emphasize racial and national origin discrimination in residential transactions, but the key principles are applicable to other prohibited bases and to nonresidential transactions.

Finally, these procedures focus on analyzing institution compliance with the broad, nondiscrimination requirements of the ECOA and the FHAct. They do not address such explicit or technical compliance provisions as the signature rules or adverse action notice requirements in Sections 1002.7 and 1002.9, respectively, of Regulation B.

Part I — Examination Scope Guidelines Background

Consistent with the Federal Financial Institutions Examination Council Interagency Fair Lending Examination Procedures, FDIC examiners evaluate fair lending risk during the scoping process by completing three general steps:

1. Examiners develop an institutional overview to assess an institution’s inherent fair lending risk. As part of this process, examiners become familiar with an institution’s structure and management, supervisory history, loan portfolio, and credit and market operations. Once examiners understand a financial institution’s lending operations they can identify the level of inherent risk. Inherent risk for fair lending is broad-based and would impact a range of products if no controls or other mitigating factors were in place to control the risk. Inherent risk arises from the general conditions or the environment in which the institution operates. The risk could be present based on an institution’s structure, supervisory history, the composition of the loan portfolio, and the credit and market operations
2. If an examiner believes that an institution has more than minimal inherent fair lending risk, the examiner should then identify the product(s) or product group(s) to review. The products or product groups selected may differ based on the type of discrimination. For example, for purposes of pricing, an examiner may select HMDA loans for further review, while for underwriting, the examiner may select consumer loans. Examiners are not expected to review all products for discrimination risk if there is more than minimal inherent risk. Rather, examiners should use their judgment and consider the following when deciding which loan products warrant further review. Examiners would then identify any discrimination risk factors and assess an institution’s compliance management system (CMS) for fair lending. Understanding the strength of an institution’s CMS is necessary to properly assess whether an institution has sufficiently mitigated applicable discrimination risk factors. If there is minimal inherent risk, no additional analysis is necessary and the fair lending review can conclude.
3. For those discrimination risk factors that have not been fully mitigated, examiners compile a list of potential focal points and identify which should be pursued as a focal point.

The FDIC has developed the Fair Lending Scope and Conclusions Memorandum (FLSC) to implement a standard nationwide format for documenting the scope and conclusions of fair lending reviews. FLSC has been adopted as a means of focusing the examiner’s attention to the areas that pose the greatest unmanaged fair lending risk to the institution. It incorporates the Interagency Fair Lending Examination Procedures¹ and assists in documenting the types of fair lending risks that are present; the controls that management has put in place to manage the risk; the effectiveness of these controls; why the particular focal point(s) are chosen; the level of review conducted; and the results of any additional analysis that was conducted. The FLSC is included in section IV-3 of this manual.

The scope of an examination encompasses the loan product(s), market(s), decision center(s), time frame, and prohibited basis and control group(s) to be analyzed during the examination. These procedures refer to each potential combination of those elements as a “focal point.” Setting the scope of an examination involves, first, identifying all of the potential focal points that appear worthwhile to examine. Then, from among those, examiners select the Focal Point(s) that will form the scope of the examination, based on risk factors, priorities established in these procedures or by their respective agencies, the record from past examinations, and other relevant guidance. This phase includes obtaining an overview of an institution’s compliance management system as it relates to fair lending.

When selecting focal points for review, examiners may determine that the institution has performed “self-tests” or “self-evaluations” related to specific lending products. The difference between “self-tests” and “self-evaluations” is discussed in the Using Self-Tests and Self-Evaluations to Streamline the Examination section of the Appendix. Institutions must share all information regarding “self- evaluations” and certain limited information related to “self- tests.” Institutions may choose to voluntarily disclose additional information about “self-tests.” Examiners should make sure that institutions understand that voluntarily sharing the results of self-tests will result in a loss of confidential status of these tests. Information from “self-evaluations” or “self-tests” may allow the scoping to be streamlined. Refer to Using Self-Tests and Self-Evaluations to Streamline the Examination in the Appendix for additional details.

Scoping may disclose the existence of circumstances — such as the use of credit scoring or a large volume of residential lending— which, under an agency’s policy, call for the use of regression analysis or other statistical methods of identifying potential discrimination with respect to one or more loan products. Where that is the case, the agency’s specialized procedures should be employed for such loan products rather than the procedures set forth below.

Setting the intensity of an examination means determining the breadth and depth of the analysis that will be conducted on the selected loan product(s). This process entails a more involved analysis of the institution’s compliance risk management processes, particularly as it relates to selected products, to reach an informed decision regarding how large a sample of files to review in any transactional analyses performed and whether certain aspects of the credit process deserve heightened scrutiny.

Part I of these procedures provides guidance on establishing the scope of the examination. Part II (Compliance Management Review) provides guidance on determining the intensity of the examination. There is naturally some interdependence between these two phases. Ultimately the scope and intensity of the examination will determine the record of performance that serves as the foundation for agency conclusions about institutional compliance with fair lending obligations. The examiner should employ these procedures to arrive at a well-reasoned and practical conclusion about how to conduct a particular institution’s examination of fair lending performance.

In certain cases where an agency already possesses information which provides examiners with guidance on priorities and risks for planning an upcoming examination, such information may expedite the scoping process and make it unnecessary to carry out all of the steps below. For example, the report of the previous fair lending examination may have included recommendations for the focus of the next examination. However, examiners should validate that the institution’s operational structure, product offerings, policies, and risks have not changed since the prior examination before condensing the scoping process.

The scoping process can be performed either off-site, onsite, or both, depending on whatever is determined appropriate and feasible. In the interest of minimizing burdens on both the examination team and the institution, requests for information from the institution should be carefully thought out so as to include only the information that will clearly be useful in the examination process. Finally, any off-site information requests should be made sufficiently in advance of the on-site schedule to permit institutions adequate time to assemble necessary information and provide it to the examination team in a timely fashion. ( See “Potential Scoping Information” in the Appendix for guidance on additional information that the examiner might wish to consider including in a request).

Examiners should focus the examination based on:

• An understanding of the credit operations of the institution;
• The risk that discriminatory conduct may occur in each area of those operations; and
• The feasibility of developing a factually reliable record of an institution’s performance and fair lending compliance in each area of those operations.

Understanding Credit Operations

Before evaluating the potential for discriminatory conduct, the examiner should review sufficient information about the institution and its market to understand the credit operations of the institution and the representation of prohibited basis group residents within the markets where the institution does business. The level of detail to be obtained at this stage should be sufficient to identify whether any of the risk factors in the steps below are present. Relevant background information includes:

• The types and terms of credit products offered, differentiating among broad categories of credit such as residential, consumer, or commercial, as well as product variations within such categories (fixed vs. variable, etc.).
• Whether the institution has a special purpose credit program, or other program that is specifically designed to assist certain underserved populations.
• The volume of, or growth in, lending for each of the credit products offered.
• The demographics (i.e., race, national origin, etc.) of the credit markets in which the institution is doing business.
• The institution’s organization of its credit decision-making process, including identification of the delegation of separate lending authorities and the extent to which discretion in pricing or setting credit terms and conditions is delegated to various levels of managers, employees or independent brokers or dealers.
• The institution’s loan officer or broker compensation program.
• The types of relevant documentation/data that are available for various loan products and what is the relative quantity, quality and accessibility of such information (i.e., for which loan product(s) will the information available be most likely to support a sound and reliable fair lending analysis).
• The extent to which information requests can be readily organized and coordinated with other compliance examination components to reduce undue burden on the institution. (Do not request more information than the exam team can be expected to utilize during the anticipated course of the examination.)

In thinking about an institution’s credit markets, the examiner should recognize that these markets may or may not coincide with an institution’s Community Reinvestment Act (CRA) assessment area(s). Where appropriate, the examiner should review the demographics for a broader geographic area than the assessment area.

Where an institution has multiple underwriting or loan processing centers or subsidiaries, each with fully independent credit-granting authority, consider evaluating each center and/or subsidiary separately, provided a sufficient number of loans exist to support a meaningful analysis. In determining the scope of the examination for such institutions, examiners should consider whether:

• Subsidiaries should be examined. The agencies will hold a financial institution responsible for violations by its direct subsidiaries, but not typically for those by its affiliates (unless the affiliate has acted as the agent for the institution or the violation by the affiliate was known or should have been known to the institution before it became involved in the transaction or purchased the affiliate’s loans). When seeking to determine an institution’s relationship with affiliates that are not supervised financial institutions, limit the inquiry to what can be learned in the institution and do not contact the affiliate without prior consultation with agency staff.
• The underwriting standards and procedures used in the entity being reviewed are used in related entities not scheduled for the planned examination. This will help examiners to recognize the potential scope of policy-based violations.
• The portfolio consists of applications from a purchased institution. If so, for scoping purposes, examiners should consider the applications as if they were made to the purchasing institution. For comparison purposes, applications evaluated under the purchased institution’s standards should not be compared to applications evaluated under the purchasing institution’s standards .
• The portfolio includes purchased loans. If so, examiners should look for indications that the institution specified loans to purchase based on a prohibited factor or caused a prohibited factor to influence the origination process.
• A complete decision can be made at one of the several underwriting or loan processing centers, each with independent authority. In such a situation, it is best to conduct on-site a separate comparative analysis at each underwriting center. If covering multiple centers is not feasible during the planned examination, examiners should review their processes and internal controls to determine whether or not expanding the scope and/or length of the examination is justified.
• Decision-making responsibility for a single transaction may involve more than one underwriting center. For example, an institution may have authority to decline mortgage applicants, but only the mortgage company subsidiary may approve them. In such a situation, examiners should learn which standards are applied in each entity and the location of records needed for the planned comparisons.
• Applicants can be steered from the financial institution to the subsidiary or other lending channel and vice versa, and what policies and procedures exist to monitor this practice.
• Any third parties², such as brokers or contractors, are involved in the credit decision and how responsibility is allocated among them and the institution. The institution’s familiarity with third party actions may be important, for an institution may be in violation if it participates in transactions in which it knew or reasonably ought to have known other parties were discriminating.

As part of understanding the financial institution’s own lending operations, it is also important to understand any dealings the financial institution has with affiliated and non- affiliated mortgage loan brokers and other third party lenders.

These brokers may generate mortgage applications and originations solely for a specific financial institution or may broadly gather loan applications for a variety of local, regional, or national lenders. As a result, it is important to recognize what impact these mortgage brokers and other third party lender actions and application processing operations have on the lending operations of a financial institution. Because brokers can be located anywhere in or out of the financial institution’s primary lending or CRA assessment areas, it is important to evaluate broker activity and fair lending compliance related to underwriting, terms, and conditions, redlining, and steering, each of which is covered in more depth in sections of these procedures. Examiners should consult with their respective agencies for specific guidance regarding broker activity.

If the institution is large and geographically diverse, examiners should select only as many markets or underwriting centers as can be reviewed readily in depth, rather than selecting proportionally to cover every market. As needed, examiners should narrow the focus to the Metropolitan Statistical Area (MSA) or underwriting center(s) that are determined to present the highest discrimination risk. Examiners should use Loan Application Register (LAR) data organized by underwriting center, if available. After calculating denial rates between the control and prohibited basis groups for the underwriting centers, examiners should select the centers with the highest fair lending risk. This approach would also be used when reviewing pricing or other terms and conditions of approved applicants from the prohibited basis and control groups. If underwriting centers have fewer than five racial or national origin denials, examiners should not examine for racial discrimination in underwriting. Instead, they should shift the focus to other loan products or prohibited bases, or examination types such as a pricing examination.

However, if examiners learn of other indications of risks that favor analyzing a prohibited basis with fewer transactions than the minimum in the sample size tables, they should consult with their supervisory office on possible alternative methods of analysis. For example, there is strong reason to examine a pattern in which almost all of 19 male borrowers received low rates but almost all of four female borrowers received high rates, even though the number of each group is fewer than the stated minimum. Similarly, there would be strong reason to examine a pattern in which almost all of 100 control group applicants were approved but all four prohibited basis group applicants were not, even though the number of prohibited basis denials was fewer than five.

Evaluating the Potential for Discriminatory Conduct

Step One: Develop an Overview

Based on his or her understanding of the credit operations and product offerings of an institution, an examiner should determine the nature and amount of information required for the scoping process and should obtain and organize that information. No single examination can reasonably be expected to evaluate compliance performance as to every prohibited basis, in every product, or in every underwriting center or subsidiary of an institution. In addition to information gained in the process of Understanding Credit Operations, above, the examiner should keep in mind the followingfactors when selecting products for the scoping review:

• Which products and prohibited bases were reviewed during the most recent prior examination(s) and, conversely, which products and prohibited bases have not recently been reviewed?
• Which prohibited basis groups make up a significant portion of the institution’s market for the different credit products offered?
• Which products and prohibited basis groups the institution reviewed using either a voluntarily disclosed self-test or a self-evaluation?

Based on consideration of the foregoing factors, the examiner should request information for all residential and other loan products considered appropriate for scoping in the current examination cycle. In addition, wherever feasible, examiners should conduct preliminary interviews with the institution’s key underwriting personnel and those involved with establishing the institution’s pricing policies and practices. Using the accumulated information, the examiner should evaluate the following, as applicable:

• Underwriting guidelines, policies, and standards.
• Descriptions of credit scoring systems, including a list of factors scored, cutoff scores, extent of validation, and any guidance for handling overrides and exceptions. (Refer to Part A of the “Considering Automated Underwriting and Credit Scoring” section of the Appendix for guidance.)
• Applicable pricing policies, risk-based pricing models, and guidance for exercising discretion over loan terms and conditions.
• Descriptions of any compensation system, including whether compensation is related to, loan production or pricing.
• The institution’s formal and informal relationships with any finance companies, subprime mortgage or consumer lending entities, or similar institutions.
• Loan application forms.
• Home Mortgage Disclosure Act – Loan Application Register (HMDA-LAR) or loan registers and lists of declined applications.
• Description(s) of databases maintained for loan product(s) to be reviewed.
• Records detailing policy exceptions or overrides, exception reporting and monitoring processes.
• Copies of any consumer complaints alleging discrimination and related loan files.
• Compliance program materials (particularly fair lending policies),training manuals, organization charts, as well as record keeping, monitoring protocols, and internal controls.
• Copies of any available marketing materials or descriptions of current or previous marketing plans or programs or pre-screened solicitations.

Step Two: Identify Compliance Program Discrimination Risk Factors

Review information from agency examination work papers, institutional records and any available discussions with management representatives in sufficient detail to understand the organization, staffing, training, recordkeeping, auditing, policies and procedures of the institution’s fair lending compliance systems. Review these systems and note the following risk factors:

C1. Overall institution compliance record is weak.

C2. Prohibited basis monitoring information required by applicable laws and regulations is nonexistent or incomplete.

C3. Data and/or recordkeeping problems compromised reliability of previous examination reviews.

C4. Fair lending problems were previously found in one or more institution products or in institution subsidiaries.

C5. The size, scope, and quality of the compliance management program, including management’s involvement, designation of a compliance officer, and staffing is materially inferior to programs customarily found in institutions of similar size, market demographics, and credit complexity.

C6. The institution has not updated compliance policies and procedures to reflect changes in law or in agency guidance.

C7. Fair lending training is nonexistent or weak.

Consider these risk factors and their impact on particular lending products and practices as you conduct the product specific risk review during the scoping steps that follow. Where this review identifies fair lending compliance system deficiencies, give them appropriate consideration as part of the Compliance Management Review in Part II of these procedures.

Step Three: Review Residential Loan Products

Although home mortgages may not be the ultimate subject of every fair lending examination, this product line must at least be considered in the course of scoping every institution that is engaged in the residential lending market.

Divide home mortgage loans into the following groupings: home purchase, home improvement, and refinancings. Subdivide those three groups further if an institution does a significant number of any of the following types or forms of residential lending, and consider them separately:

• Government-insured loans
• Mobile home or manufactured housing loans
• Wholesale, indirect, and brokered loans
• Portfolio lending (including portfolios of Fannie Mae/Freddie Mac rejections)

In addition, determine whether the institution offers any conventional “affordable” housing loan programs special purpose credit programs or other programs that are specifically designed to assist certain borrowers, such as underserved populations and whether their terms and conditions make them incompatible with regular conventional loans for comparative purposes. If so, consider them separately.

If previous examinations have demonstrated the following, then an examiner may limit the focus of the current examination to alternative underwriting or processing centers or to other residential products that have received less scrutiny in the past:

• A strong fair lending compliance program.
• No record of discriminatory transactions at particular decision centers or in particular residential products.
• No indication of a significant change in personnel, operations, or underwriting or pricing policies at those centers or in those residential products.
• No unresolved fair lending complaints, administrative proceedings, litigation, or similar factors.
• No discretion to set price or credit terms and conditions in particular decision centers or for particular residential products.

Step Four: Identify Residential Lending Discrimination Risk Factors

Review the lending policies, marketing plans, underwriting, appraisal and pricing guidelines, broker/agent agreements and loan application forms for each residential loan product that represents an appreciable volume of, or displays noticeable growth in, the institution’s residential lending.

• Review also any available data regarding the geographic distribution of the institution’s loan originations with respect to the race and national origin percentages of the census tracts within its assessment area or, if different, its residential loan product lending area(s).
• Conduct interviews of loan officers and other employees or agents in the residential lending process concerning adherence to and understanding of the above policies and guidelines as well as any relevant operating practices.

• In the course of conducting the foregoing inquiries, look for the following risk factors (factors are numbered alphanumerically to coincide with the type of factor, e.g., “O” for “overt”; “P” for “pricing,” etc.).

  NOTE: For risk factors below that are marked with an asterisk (*), examiners need not attempt to calculate the indicated ratios for racial or national origin characteristics when the institution is not a HMDA reporter. However, consideration should be given in such cases to whether or not such calculations should be made based on gender or racial-ethnic surrogates. 

Overt indicators of discrimination such as: 

O1. Including explicit prohibited basis identifiers in the institution’s written or oral policies and procedures (under writing criteria, pricing standards, etc.).

O2. Collecting information, conducting inquiries or imposing conditions contrary to express requirements of Regulation B.

O3. Including variables in a credit scoring system that constitute a basis or factor prohibited by Regulation B or, for residential loan scoring systems, the FHAct. (If a credit scoring system scores age, refer to Part E of the Considering Automated Underwriting and Credit Scoring section of the Appendix.)

O4. Statements made by the institution’s officers, employees, or agents which constitute an express or implicit indication that one or more such persons have engaged or do engage in discrimination on a prohibited basis in any aspect of a credit transaction.

O5. Employee or institutional statements that evidence attitudes based on prohibited basis prejudices or stereotypes.

Indicators of potential disparate treatment in Underwriting such as: 

U1. *Substantial disparities among the approval/denial rates for applicants by monitored prohibited basis characteristic (especially within income categories).

U2. *Substantial disparities among the application processing times for applicants by monitored prohibited basis characteristic (especially within denial reason groups).

U3. *Substantially higher proportion of withdrawn/ incomplete applications from prohibited basis group applicants than from other applicants.

U4. Vague or unduly subjective underwriting criteria.

U5. Lack of clear guidance on making exceptions to underwriting criteria, including credit scoring overrides.

U6. Lack of clear loan file documentation regarding reasons for any exceptions to standard underwriting criteria, including credit scoring overrides.

U7. Relatively high percentages of either exceptions to underwriting criteria or overrides of credit score cutoffs.

U8. Loan officer or broker compensation based on loan volume (especially loans approved per period of time).

U9. Consumer complaints alleging discrimination in loan processing or in approving/denying residential loans.

Indicators of potential disparate treatment in Pricing (interest rates, fees, or points) such as: 

P1. Financial incentives for loan officers or brokers to charge higher prices (including interest rate, fees and points). Special attention should be given to situations where financial incentives are accompanied by broad pricing discretion (as in P2), such as through the use of overages or yield spread premiums.

P2. Presence of broad discretion in loan pricing (including interest rate, fees and points), such as through overages, under ages or yield spread premiums. Such discretion may be present even when institutions provide rate sheets and fees schedules, if loan officers or brokers are permitted to deviate from those rates and fees without clear and objective criteria.

P3. Use of risk-based pricing that is not based on objective criteria or applied consistently.

P4. *Substantial disparities among prices being quoted or charged to applicants who differ as to their monitored prohibited basis characteristics.

P5. Consumer complaints alleging discrimination in residential loan pricing.

P6. *In mortgage pricing, disparities in the incidence or rate spreads³ of higher-priced lending by prohibited basis characteristics as reported in the HMDA data.

P7. *A loan program that contains only borrowers from a prohibited basis group, or has significant differences in the percentages of prohibited basis groups, especially in the absence of a Special Purpose Credit Program under ECOA.

Indicators of potential disparate treatment by Steering such as: 

S1. Lack of clear, objective and consistently implemented standards for (i) referring applicants to subsidiaries, affiliates, or lending channels within the institution (ii) classifying applicants as “prime” or “sub-prime” borrowers, or (iii) deciding what kinds of alternative loan products should be offered or recommended to applicants (product placement).

S2. Financial incentives for loan officers or brokers to place applicants in nontraditional products (i.e., negative amortization, “interest only”, “payment option” adjustable rate mortgages) or higher cost products.

S3. For an institution that offers different products based on credit risk levels, any significant differences in percentages of prohibited basis groups in each of the alternative loan product categories.

S4. *Significant differences in the percentage of prohibited basis applicants in loan products or products with specific features relative to control group applicants. Special attention should be given to products and features that have potentially negative consequences for applicants (i.e., non-traditional mortgages, prepayment penalties, lack of escrow requirements, or credit life insurance).

S5. *For an institution that has one or more sub-prime mortgage subsidiaries or affiliates, any significant differences, by loan product, in the percentage of prohibited basis applicants of the institution compared to the percentage of prohibited basis applicants of the subsidiary(ies) or affiliate(s).

S6. *For an institution that has one or more lending channels that originate the same loan product, any significant differences in the percentage of prohibited basis applicants in one of the lending channels compared to the percentage of prohibited basis applicants of the other lending channel.

S7. Consumer complaints alleging discrimination in residential loan pricing or product placement.

S8. *For an institution with sub-prime mortgage subsidiaries, a concentration of those subsidiaries’ branches in minority areas relative to its other branches.

Indicators of potential discriminatory Redlining such as: 

R1. *Significant differences, as revealed in HMDA data, in the number of applications received, withdrawn, approved not accepted, and closed for incompleteness or loans originated in those areas in the institution’s market that have relatively high concentrations of minority group residents compared with areas with relatively low concentrations of minority residents.

R2. *Significant differences between approval/denial rates for all applicants (minority and non-minority) in areas with relatively high concentrations of minority group residents compared with areas with relatively low concentrations of minority residents.

R3. *Significant differences between denial rates based on insufficient collateral for applicants from areas with relatively high concentrations of minority residents and those areas with relatively low concentrations of minority residents.

R4. *Significant differences in the number of originations of higher-priced loans or loans with potentially negative consequences for borrowers, (i.e., non-traditional mortgages, prepayment penalties, lack of escrow requirements) in areas with relatively high concentrations of minority residents compared with areas with relatively low concentrations of minority residents.

R5. Other patterns of lending identified during the most recent CRA examination that differ by the concentration of minority residents.

R6. Explicit demarcation of credit product markets that excludes MSAs, political subdivisions, census tracts, or other geographic areas within the institution’s lending market or CRA assessment areas and having relatively high concentrations of minority residents.

R7. Difference in services available or hours of operation at branch offices located in areas with concentrations of minority residents when compared to branch offices located in areas with concentrations of non-minority residents.

R8. Policies on receipt and processing of applications, pricing, conditions, or appraisals and valuation, or on any other aspect of providing residential credit that vary between areas with relatively high concentrations of minority residents and those areas with relatively low concentrations of minority residents.

R9. The institution’s CRA assessment area appears to have been drawn to exclude areas with relatively high concentrations of minority residents.

R10.Employee statements that reflect an aversion to doing business in areas with relatively high concentrations of minority residents.

R11. Complaints or other allegations by consumers or community representatives that the institution excludes or restricts access to credit for areas with relatively high concentrations of minority residents. Examiners should review complaints against the institution filed either with their agency or the institution; the CRA public comment file; community contact forms; and the responses to questions about redlining, discrimination, and discouragement of applications, and about meeting the needs of racial or national origin minorities, asked as part of obtaining local perspectives on the performance of financial institutions during prior CRA examinations.

R12. An institution that has most of its branches in predominantly non-minority neighborhoods at the same time that the institution’s sub-prime mortgage subsidiary has branches which are located primarily in predominantly minority neighborhoods.

Indicators of potential disparate treatment in Marketing of residential products, such as: 

M1. Advertising patterns or practices that a reasonable person would believe indicate prohibited basis customers are less desirable.

M2. Advertising only in media serving non-minority areas of the market.

M3. Marketing through brokers or other agents that the institution knows (or has reason to know) would serve only one racial or ethnic group in the market.

M4. Use of marketing programs or procedures for residential loan products that exclude one or more regions or geographies within the institutions assessment or marketing area that have significantly higher percentages of minority group residents than does the remainder of the assessment or marketing area.

M5. Using mailing or other distribution lists or other marketing techniques for pre-screened or other offerings of residential loan products that:

• Explicitly exclude groups of prospective borrowers on a prohibited basis; or
• Exclude geographies (e.g., census tracts, ZIP codes, etc.) within the institution’s marketing area that have significantly higher percentages of minority group residents than does the remainder of the marketing area.

M6. *Proportion of prohibited basis applicants is significantly lower than that group’s representation in the total population of the market area.

M7. Consumer complaints alleging discrimination in advertising or marketing loans.

Step Five: Organize and Focus Residential Risk Analysis

Review the risk factors identified in Step 4 and, for each loan product that displays risk factors, articulate the possible discriminatory effects encountered and organize the examination of those loan products in accordance with the following guidance. For complex issues regarding these factors, consult with agency supervisory staff.

• Where overt evidence of discrimination, as described in factors O1-O5, has been found in connection with a product, document those findings as described in Part III, B, besides completing the remainder of the planned examination analysis.
• Where any of the risk factors U1-U9 are present, consider conducting an underwriting comparative file analysis as described in Part III, C.
• Where any of the risk factors P1-P7 are present, consider conducting a pricing comparative file analysis as described in Part III, D.
• Where any of the risk factors S1-S8 are present, consider conducting a steering analysis as described in Part III, E.
• Where any of the risk factors R1-R12 are present, consider conducting an analysis for redlining as described in Part III, G.
• Where any of the risk factors M1-M7 are present, consider conducting a marketing analysis as described in Part III, H.
• Where an institution uses age in any credit scoring system, consider conducting an examination analysis of that credit scoring system’s compliance with the requirements of Regulation B as described in Part III, I.

Step Six: Identify Consumer Lending Discrimination Risk Factors

For any consumer loan products selected in Step One for risk analysis, examiners should conduct a risk factor review similar to that conducted for residential lending products in Steps Three through Five, above. Examiners should consult with agency supervisory staff regarding the potential use of surrogates to identify possible prohibited basis group individuals.

NOTE: The term surrogate in this context refers to any factor related to a loan applicant that potentially identifies that applicant’s race, color, or other prohibited basis characteristic in instances where no direct evidence of that characteristic is available. Thus, in consumer lending, where monitoring data is generally unavailable, a Hispanic or Asian surname could constitute a surrogate for an applicant’s race or national origin because the examiner can assume that the institution (which can rebut the presumption) perceived the person to be Hispanic or Asian. Similarly, an applicant’s given name could serve as a surrogate for his or her gender. A surrogate for a prohibited basis group characteristic may be used to set up a comparative analysis with control group applicants or borrowers. 

Examiners should then follow the rules in Steps Three through Five, above and identify the possible discriminatory patterns encountered and consider examining those products determined to have sufficient risk of discriminatory conduct.

Step Seven: Identify Commercial Lending Discrimination Risk Factors

Where an institution does a substantial amount of lending in the commercial lending market, most notably small business lending and the product has not recently been examined or the underwriting standards have changed since the last examination of the product, the examiner should consider conducting a risk factor review similar to that performed for residential lending products, as feasible, given the limited information available. Such an analysis should generally be limited to determining risk potential based on risk factors U4- U8; P1-P3; R5-R7; and M1-M3.

If the institution makes commercial loans insured by the Small Business Administration (SBA), determine from agency supervisory staff whether SBA loan data (which codes race and other factors) are available for the institution and evaluate those data pursuant to instructions accompanying them.

For large institutions reporting small business loans for CRA purposes and where the institution also voluntarily geocodes loan denials, look for material discrepancies in ratios of approval-to-denial rates for applications in areas with high concentrations of minority residents compared to areas with concentrations of non-minority residents.

Articulate the possible discriminatory patterns identified and consider further examining those products determined to have sufficient risk of discriminatory conduct in accordance with the procedures for commercial lending described in Part III, F.

Step Eight: Complete the Scoping Process

To complete the scoping process, the examiner should review the results of the preceding steps and select those focal points that warrant examination, based on the relative risk levels identified above. In order to remain within the agency’s resource allowances, the examiner may need to choose a smaller number of focal points from among all those selected on the basis of risk. In such instances, set the scope by first, prioritizing focal points on the basis of (i) high number and/or relative severity of risk factors; (ii) high data quality and other factors affecting the likelihood of obtaining reliable examination results; (iii) high loan volume and the likelihood of widespread risk to applicants and borrowers; and (iv) low quality of any compliance program and, second, selecting for examination review as many focal points as resources permit.

Where the judgment process among competing focal points is a close call, information learned in the phase of conducting the compliance management review can be used to further refine the examiner’s choices.

Part II — Compliance Management Review

The Compliance Management Review enables the examination team to determine:

• The intensity of the current examination based on an evaluation of the compliance management measures employed by an institution.

• The reliability of the institution’s practices and procedures for ensuring continued fair lending compliance.

Generally, the review should focus on:

• Determining whether the policies and procedures of the institution enable management to prevent, or to identify and self-correct, illegal disparate treatment in the transactions that relate to the products and issues identified for further analysis under Part I of these procedures.
• Obtaining a thorough understanding of the manner by which management addresses its fair lending responsibilities with respect to (a) the institution’s lending practices and standards, (b) training and other application- processing aids, (c) guidance to employees or agents in dealing with customers, and (d) its marketing or other promotion of products and services.

To conduct this review, examiners should consider institutional records and interviews with appropriate management personnel in the lending, compliance, audit, and legal functions. The examiner should also refer to the Compliance Management Analysis Checklist contained in the Appendix to evaluate the strength of the compliance programs in terms of their capacity to prevent, or to identify and self- correct, fair lending violations in connection with the products or issues selected for analysis. Based on this evaluation:

• Set the intensity of the transaction analysis by minimizing sample sizes within the guidelines established in Part III and the Fair Lending Sample Size Tables in the Appendix, to the extent warranted by the strength and thoroughness of the compliance programs applicable to those focal points selected for examination.
• Identify any compliance program or system deficiencies that merit correction or improvement and present these to management in accordance with Part IV of these procedures.

Where an institution performs a self-evaluation or has voluntarily disclosed the report or results of a self-test of any product or issue that is within the scope of the examination and has been selected for analysis pursuant to Part I of these procedures, examiners may streamline the examination, consistent with agency guidance, provided the self-test or self-evaluation meets the requirements set forth in Using Self-Tests and Self-Evaluations to Streamline the Examination located in the Appendix.

Part III — Examination Procedures ⁴

Once the scope and intensity of the examination have been determined, assess the institution’s fair lending performance by applying the appropriate procedures that follow to each of the examination focal points already selected.

A. Verify Accuracy of Data

Prior to any analysis and preferably before the scoping process, examiners should assess the accuracy of the data being reviewed. Data verifications should follow specific protocols (sampling, size, etc.) intended to ensure the validity of the review. For example, where an institution’s LAR data is relied upon, examiners should generally validate the accuracy of the institution’s submitted data by selecting a sample of LAR entries and verifying that the information noted on the LAR was reported according to instructions by comparing information contained in the loan file for each sampled loan. If the LAR data are inconsistent with the information contained in the loan files, depending on the nature of the errors, examiners may not be able to proceed with a fair lending analysis until the LAR data have been corrected by the institution. In cases where inaccuracies impede the examination, examiners should direct the institution to take action to ensure data integrity (data scrubbing, monitoring, training, etc.).

NOTE: While the procedures refer to the use of HMDA data, other data sources should be considered, especially in the case of non-HMDA reporters or institutions that originate loans but are not required to report them on a LAR. 

B. Documenting Overt Evidence of Disparate Treatment

Where the scoping process or any other source identifies overt evidence of disparate treatment, the examiner should assess the nature of the policy or statement and the extent of its impact on affected applicants by conducting the following analysis.

Step 1. Where the indicator(s) of overt discrimination are found in or based on a written policy (for example, a credit scorecard) or communication, determine and document:

a. The precise language of the apparently discriminatory policy or communication and the nature of the fair lending concerns that it raises.

b. The institution’s stated purpose in adopting the policy or communication and the identity of the person on whose authority it was issued or adopted.

c. How and when the policy or communication was put into effect.

d. How widely the policy or communication was applied.

e. Whether and to what extent applicants were adversely affected by the policy or communication.

Step 2. Where any indicator of overt discrimination was an oral statement or unwritten practice, determine and document:

a. The precise nature of both the statement, or practice, and of the fair lending concerns that they raise.

b. The identity of the persons making the statement or applying the practice and their descriptions of the reasons for it and the persons authorizing or directing the use of the statement or practice.

c. How and when the statement or practice was disseminated or put into effect.

d. How widely the statement or practice was disseminated or applied.

e. Whether and to what extent applicants were adversely affected by the statement or practice.

Assemble findings and supporting documentation for presentation to management in connection with Part IV of these procedures.

C. Transactional Underwriting Analysis — Residential and Consumer Loans.

Step 1. Set Sample Size

a. For each focal point selected for this analysis, two samples will be utilized: (i) prohibited basis group denials and (ii) control group approvals, both identified either directly from monitoring information in the case of residential loan applications or through the use of application data or surrogates in the case of consumer applications.

b. Refer to Fair Lending Sample Size Tables, Table A in the Appendix and determine the size of the initial sample for each focal point, based on the number of prohibited basis group denials and the number of control group approvals by the institution during the twelve month (or calendar year) period of lending activity preceding the examination.

In the event that the number of denials and/or approvals acted on during the preceding 12 month period substantially exceeds the maximum sample size shown in Table A, reduce the time period from which that sample is selected to a shorter period. (In doing so, make every effort to select a period in which the institution’s underwriting standards are most representative of those in effect during the full 12 month period preceding the examination.)

c. If the number of prohibited basis group denials or control group approvals for a given focal point that were acted upon during the 12 month period referenced in 1.b., above, do not meet the minimum standards set forth in the Sample Size Table, examiners need not attempt a transactional analysis for that focal point. Where other risk factors favor analyzing such a focal point, consult with agency supervisory staff on possible alternative methods of judgmental comparative analysis.

d. If agency policy calls for a different approach to sampling (e.g., a form of statistical analysis, a mathematical formula, or an automated tool) for a limited class of institutions, examiners should follow that approach.

Step 2. Determine Sample Composition

a. To the extent the institution maintains records of loan outcomes resulting from exceptions to its credit underwriting standards or other policies (e.g., overrides to credit score cutoffs), request such records for both approvals and denials, sorted by loan product and branch or decision center, if the institution can do so. Include in the initial sample for each focal point all exceptions or overrides applicable to that focal point.

b. Using HMDA/LAR data or, for consumer loans, comparable loan register data to the extent available, choose approved and denied applications based on selection criteria that will maximize the likelihood of finding marginal approved and denied applicants, as discussed below.

c. To the extent that the above factors are inapplicable or other selection criteria are unavailable or do not facilitate selection of the entire sample size of files, complete the initial sample selection by making random file selections from the appropriate sample categories in the Sample Size Table.

Step 3. Compare Approved and Denied Applications

Overview: Although a creditor’s written policies and procedures may appear to be nondiscriminatory, lending personnel may interpret or apply policies in a discriminatory manner. In order to detect any disparate treatment among applicants, the examiner should first eliminate all but “marginal transactions” (see 3.b. below) from each selected focal point sample. Then, a detailed profile of each marginal applicant’s qualifications, the level of assistance received during the application process, the reasons for denial, the loan terms, and other information should be recorded on an Applicant Profile Spreadsheet. Once profiled, the examiner can compare the target and control groups for evidence that similarly qualified applicants have been treated differently as to either the institution’s credit decision or the quality of assistance provided.

a. Create Applicant Profile Spreadsheet

Based upon the institution’s written and/or articulated credit standards and loan policies, identify categories of data that should be recorded for each applicant and provide a field for each of these categories on a worksheet or computerized spreadsheet. Certain data (income, loan amount, debt, etc.) should always be included in the spreadsheet, while the other data selected will be tailored for each loan product and institution based on applicable underwriting criteria and such issues as branch location and underwriter. Where credit bureau scores and/or application scores are an element of the institution’s underwriting criteria (or where such information is regularly recorded in loan files, whether expressly used or not), include a data field for this information in the spread sheet.

In order to facilitate comparisons of the quality of assistance provided to target and control group applicants, respectively, every work sheet should provide a “comments” block appropriately labeled as the site for recording observations from the file or interviews regarding how an applicant was, or was not, assisted in overcoming credit deficiencies or otherwise qualifying for approval.

b. Complete Applicant Profiles

From the application files sample for each focal point, complete applicant profiles for selected denied and approved applications as follows:

• A principal goal is to identify cases where similarly qualified prohibited basis and control group applicants had different credit outcomes, because the agencies have found that discrimination, including differences in granting assistance during the approval process, is more likely to occur with respect to applicantswho are not either clearly qualified or unqualified ( i.e., “marginal” applicants). The examiner-in-charge should, during the following steps, judgmentally select from the initial sample only those denied and approved applications which constitute marginal transactions. (See Appendix on Identifying Marginal Transactions for guidance)
• If few marginal control group applicants are identified from the initial sample, review additional files of approved control group applicants. This will either increase the number of marginal approvals or confirm that marginal approvals are so infrequent that the marginal denials are unlikely to involve disparate treatment.
• The judgmental selection of both marginal-denied and marginal-approved applicant loan files should be done together, in a “back and forth” manner, to facilitate close matches and a more consistent definition of “marginal” between these two types of loan files.
• Once the marginal files have been identified, the data elements called for on the profile spreadsheet are extracted or noted and entered.
• While conducting the preceding step, the examiner should simultaneously look for and document on the spreadsheet any evidence found in marginal files regarding the following:
  • the extent of any assistance, including both affirmative aid and waivers or partial waivers of credit policy provisions or requirements, that appears to have been provided to marginal- approved control group applicants which enabled them to overcome one or more credit deficiencies, such as excessive debt-to-income ratios; and
  • the extent to which marginal-denied target group applicants with similar deficiencies were, or were not, provided similar affirmative aid, waivers or other forms of assistance.

c. Review and Compare Profiles

• For each focal point, review all marginal profiles to determine if the underwriter followed institution lending policies in denying applications and whether the reason(s) for denial were supported by facts documented in the loan file and properly disclosed to the applicant pursuant to Regulation B. If any (a) unexplained deviations from credit standards, (b) inaccurate reasons for denial or (c) incorrect disclosures are noted, (whether in a judgmental underwriting system, a scored system or a mixed system) the examiner should obtain an explanation from the underwriter and document the response on an appropriate workpaper.

NOTE: In constructing the applicant profiles to be compared, examiners must adjust the facts compared so that assistance, waivers, or acts of discretion are treated consistently between applicants. For example, if a control group applicant’s DTI ratio was lowered to 42% because the institution decided to include short-term overtime income and a prohibited basis group applicant who was denied due to “insufficient income” would have had his ratio drop from 46% to 41% if his short-term overtime income had been considered, then the examiners should consider 41%, not 46%, in determining the benchmark. 

• For each reason for denial identified within the target group, rank the denied prohibited basis applicants, beginning with the applicant whose qualification(s) related to that reason for denial were least deficient. (The top-ranked denied applicant in each such ranking will be referred to below as the “benchmark” applicant.)
• Compare each marginal control group approval to the benchmark applicant in each reason-for-denial ranking developed in step (b), above. If there are no approvals who are equally or less qualified, then there are no instances of disparate treatment for the institution to account for. For all such approvals that appear no better qualified than the denied benchmark applicant
  • identify the approved loan on the worksheet or spreadsheet as an “overlap approval,” and
  • compare that overlap approval with other marginal prohibited basis denials in the ranking to determine whether additional overlaps exist. If so, identify all overlapping approvals and denials as above.
• Where the focal point involves use of a credit scoring system, the analysis for disparate treatment is similar to the procedures set forth in (c) above, and should focus primarily on overrides of the scoring system itself. For guidance on this type of analysis, refer to Considering Automated Underwriting and Credit Scoring , Part C in the Appendix.

Step 4. If there is some evidence of violations in the underwriting process but not enough to clearly establish the existence of a pattern or practice, the examiner should expand the sample as necessary to determine whether a pattern or practice does or does not exist.

Step 5. Discuss all findings resulting from the above comparisons with management and document both the findings and all conversations on an appropriate worksheet.

D. Analyzing Potential Disparities in Pricing and Other Terms and Conditions.

Depending on the intensity of the examination and the size of the borrower population to be reviewed, the analysis of decisions on pricing and other terms and conditions may involve a comparative file review, statistical analysis, a combination of the two, or other specialized technique used by an agency. Each examination process assesses an institution’s credit-decision standards and whether decisions on pricing and other terms and conditions are applied to borrowers without regard to a prohibited basis.

The procedures below encompass the examination steps for a comparative file review. Examiners should consult their own agency’s procedures for detailed guidance where appropriate. For example, when file reviews are undertaken in conjunction with statistical analysis, the guidance on specific sample sizes referenced below may not apply.

Step 1. Determine Sample Selection

Examiners may review data in its entirety or restrict their analysis to a sample depending on the examination approach used and the quality of the institution’s compliance management system. The Fair Lending Sample Size Tables in the Appendix provide general guidance about appropriate sample sizes. Generally, the sample size should be based on the number of prohibited basis group and control group originations for each focal point selected during the 12 months preceding the examination and the outcome of the compliance management system analysis conducted in Part II. When possible, examiners should request specific loan files in advance and request that the institution have them available for review at the start of the examination.

Step 2. Determine Sample Composition and Create Applicant Profiles

Examiners should tailor their sample and subsequent analysis to the specific factors that the institution considers when determining its pricing, terms, and conditions. For example, while decisions on pricing, and other terms and conditions are part of an institution’s underwriting process, general underwriting criteria should not be used in the analysis if they are not relevant to the term or condition to be reviewed. Additionally, consideration should be limited to factors which examiners determine to be legitimate.

While the period for review should be 12-months, prohibited basis group and control group borrowers should be grouped and reviewed around a range of dates during which the institution’s practices for the term or condition being reviewed were the same. Generally, examiners should use the loan origination date or the loan application date.

Identify data to be analyzed for each focal point to be reviewed and record this information for each borrower on a spreadsheet to ensure a valid comparison regarding terms and conditions. For example, in certain cases, an institution may offer slightly differentiated products with significant pricing implications to borrowers. In these cases, it may be appropriate to group these procedures together for the purposes of evaluation.

Step 3. Review Terms and Conditions; Compare with Borrower Outcomes

a. Review all loan terms and conditions (rates, points, fees, maturity variations, LTVs, collateral requirements, etc.) with special attention to those which are left, in whole or in part, to the discretion of loan officers or underwriters. For each such term or condition, identify (a) any prohibited basis group borrowers in the sample who appear to have been treated unfavorably with respect to that term or condition and (b) any control group borrowers who appear to have been treated favorably with respect to that term or condition. The examiner’s analysis should be thoroughly documented in the workpapers.

b. Identify from the sample universe any control group borrowers who appear to have been treated more favorably than one or more of the above-identified prohibited basis group borrowers and who have pricing or creditworthiness factors (under the institution’s standards) that are equal to or less favorable than the prohibited basis group borrowers.

c. Obtain explanations from the appropriate loan officer or other employee for any differences that exist and reanalyze the sample for evidence of discrimination.

d. If there is some evidence of violations in the imposition of terms and conditions but not enough to clearly establish the existence of a pattern or practice, the examiner should expand the sample as necessary to determine whether a pattern or practice does or does not exist.

e. Discuss differences in comparable loans with the institution’s management and document all conversations on an appropriate worksheet. For additional guidance on evaluating management’s responses, refer to Part A, 1 – 5, Evaluating Responses to Evidence of Disparate Treatment in the Appendix.

E. Steering Analysis

An institution that offers a variety of lending products or product features, either through one channel or through multiple channels, may benefit consumers by offering greater choices and meeting the diverse needs of applicants. Greater product offerings and multiple channels, however, may also create a fair lending risk that applicants will be illegally steered to certain choices based on prohibited characteristics.

Several examples illustrate potential fair lending risk:

• An institution that offers different lending products based on credit risk levels may present opportunities for loan officers or brokers to illegally steer applicants to the higher-risk products.
• An institution that offers nontraditional loan products or loan products with potentially onerous terms (such as prepayment penalties) may present opportunities for loan officers or brokers to illegally steer applicants to certain products or features.
• An institution that offers prime or sub-prime products through different channels may present opportunities for applicants to be illegally steered to the sub-prime channel.

The distinction between guiding consumers toward a specific product or feature and illegal steering centers on whether the institution did so on a prohibited basis, rather than based on an applicant’s needs or other legitimate factors. It is not necessary to demonstrate financial harm to a group that has been “steered.” It is enough to demonstrate that action was taken on a prohibited basis regardless of the ultimate financial outcome. If the scoping analysis reveals the presence of one or more risk factors S1 through S8 for any selected focal point, consult with agency supervisory staff about conducting a steering analysis as described below.

Step 1. Clarify what options are available to applicants

Through interviews with appropriate personnel of the institution and review of policy manuals, procedure guidelines and other directives, obtain and verify the following information for each product-alternative product pairing or grouping identified above:

a. All underwriting criteria for the product or feature and their alternatives that are offered by the institution or by a subsidiary or affiliate. Examples of products may include stated income, negative amortization, and options ARMs. Examples of terms and features include prepayment penalties and escrow requirements. The distinction between a product, term, and feature may vary institution to institution. For example, some institutions may consider “stated income” a feature, whiles others may consider that a distinct product.

b. Pricing or other costs applicable to the product and the alternative product(s), including interest rates, points, and all fees.

Step 2. Document the policies, conditions, or criteria that have been adopted by the institution for determining how referrals are to be made and choices presented to applicants.

a. Obtain not only information regarding the product or feature offered by the institution and alternatives offered by subsidiaries/affiliates, but also information on alternatives offered solely by the institution itself.

b. Obtain any information regarding a subsidiary of the institution directly from that entity, but seek information regarding an affiliate or holding company subsidiary only from the institution itself.

c. Obtain all appropriate documentation and provide a written summary of all discussions with loan personnel and managers.

d. Obtain documentation and/or employee estimates as to the volume of referrals made from or to the institution, for each product, during a relevant time period.

e. Resolve to the extent possible any discrepancies between information found in the institution’s documents and information obtained in discussions with loan personnel and managers by conducting appropriate follow-up interviews.

f. Identify any policies and procedures established by the institution and/or the subsidiary or affiliate for (i) referring a person who applies to the institution, but does not meet its criteria, to another internal lending channel, subsidiary or affiliate; (ii) offering one or more alternatives to a person who applies to the institution for a specific product or feature, but does not meet its criteria; or (iii) referring a person who applies to a subsidiary or affiliate for its product, but who appears qualified for a loan from the institution, to the institution; or referring a person who applies through one internal lending channel for a product, but who appears to be qualified for a loan through another lending channel to that particular lending channel.

g. Determine whether loan personnel are encouraged, through financial incentives or otherwise, to make referrals, either from the institution to a subsidiary/affiliate or vice versa. Similarly, determine whether the institution provides financial incentives related to products and features.

Step 3. Determine how referral decisions are made and documented within the institution.

Determine how a referral is made to another internal lending channel, subsidiary, or affiliate. Determine the reason for referral and how it is documented.

Step 4. Determine to what extent individual loan personnel are able to exercise personal discretion in deciding what loan products or other credit alternatives will be made available to a given applicant.

Step 5. Determine whether the institution’s stated policies, conditions, or criteria in fact are adhered to by individual decision makers. If not, does it appear that different policies or practices are actually in effect?

Enter data from the prohibited basis group sample on the spread sheets and determine whether the institution is, in fact, applying its criteria as stated. For example, if one announced criterion for receiving a “more favorable” prime mortgage loan was a back end debt ratio of no more than 38%, review the spread sheets to determine whether that criteria was adhered to. If the institution’s actual treatment of prohibited basis group applicants appears to differ from its stated criteria, document such differences for subsequent discussion with management.

Step 6. To the extent that individual loan personnel have any discretion in deciding what products and features to offer applicants, conduct a comparative analysis to determine whether that discretion has been exercised in a nondiscriminatory manner.

Compare the institution’s or subsidiary/affiliate’s treatment of control group and prohibited basis group applicants by adapting the “benchmark” and “overlap” technique discussed in Part III, Section C of these procedures. For purposes of this Steering Analysis, that technique should be conducted as follows:

a. For each focal point to be analyzed, select a sample of prohibited basis group applicants who received “less favorable” treatment (e.g., referral to a finance company or a subprime mortgage subsidiary or counteroffers of less favorable product alternatives).

NOTE: In selecting the sample, follow the guidance of Fair Lending Sample Size Tables, Table B in the Appendix and select “marginal applicants” as instructed in Part III, Section C, above. 

b. Prepare a spread sheet for the sample which contains data entry categories for those underwriting and/or referral criteria that the institution identified in Step 1.b as used in reaching underwriting and referral decisions between the pairs of products.

c. Review the “less favorably” treated prohibited basis group sample and rank this sample from least qualified to most qualified.

d. From the sample, identify the best qualified prohibited basis group applicant, based on the criteria identified for the control group, above. This applicant will be the “benchmark” applicant. Rank order the remaining applicants from best to least qualified.

e. Select a sample of control group applicants. Identify those who were treated “more favorably” with respect to the same product-alternative product pair as the prohibited basis group. (Again refer to the Sample Size Table B and marginal applicant processes noted above in selecting the sample.)

f. Compare the qualifications of the benchmark applicant with those of the control group applicants, beginning with the least qualified member of that sample. Any control group applicant who appears less qualified than the benchmark applicant should be identified on the spreadsheet as a “control group overlap.”

g. Compare all control group overlaps with other, less qualified prohibited basis group applicants to determine whether additional overlaps exist

h. Document all overlaps as possible disparities in treatment. Discuss all overlaps and related findings (e.g., any differences between stated and actual underwriting and/or referral criteria) with management, documenting all such conversations.

Step 7. Examiners should consult with their agency’s supervisory staff if they see a need to contact control group or prohibited basis group applicants to substantiate the steering analysis.

F. Transactional Underwriting Analysis — Commercial Loans.

Overview: Unlike consumer credit, where loan products and prices are generally homogenous and underwriting involves the evaluation of a limited number of credit variables, commercial loans are generally unique and underwriting methods and loan pricing may vary depending on a large number of credit variables. The additional credit analysis that is involved in underwriting commercial credit products will entail additional complexity in the sampling and discrimination analysis process. Although ECOA prohibits discrimination in all commercial credit activities of a covered institution, the agencies recognize that small businesses (sole proprietorships, partnerships, and small, closely-held corporations) may have less experience in borrowing. Small businesses may have fewer borrowing options, which may make them more vulnerable to discrimination. Therefore, in implementing these procedures, examinations should generally be focused on small business credit (commercial applicants that had gross revenues of $1,000,000 or less in the preceding fiscal year), absent some evidence that a focus on other commercial products would be more appropriate.

Step 1. Understand Commercial Loan Policies

For the commercial product line selected for analysis, the examiner should first review credit policy guidelines and interview appropriate commercial loan managers and officers to obtain written and articulated standards used by the institution in evaluating commercial loan applications.

NOTE: Examiners should consult their own agencies for guidance on when a comparative analysis or statistical analysis is appropriate, and follow their agencies procedures for conducting such a review/analysis. 

Step 2. Conduct Comparative File Review

a. Select all (or a maximum of ten) denied applications that were acted on during the three month period prior to the examination. To the extent feasible, include denied applications from businesses that are (i) located in minority and/or integrated geographies or (ii) appear to be owned by women or minority group members, based on the names of the principals shown on applications or related documents. (In the case of institutions that do a significant volume of commercial lending, consider reviewing more than ten applications.)

b. For each of the denied commercial applications selected, record specific information from loan files and through interviews with the appropriate loan officer(s), about the principal owners, the purpose of the loan, and the specific, pertinent financial information about the commercial enterprise (including type of business — retail, manufacturing, service, etc.), that was used by the institution to evaluate the credit request. Maintenance or use of data that identifies prohibited basis characteristics of those involved with the business (either in approved or denied loan applications) should be evaluated as a potential violation of Regulation B.

c. Select ten approved loans that appear to be similar with regard to business type, purpose of loan, loan amount, loan terms, and type of collateral, as the denied loans sampled. For example, if the denied loan sample includes applications for lines of credit to cover inventory purchases for retail businesses, the examiner should select approved applications for lines of credit from retail businesses.

d. For each approved commercial loan application selected, obtain and record information parallel to that obtained for denied applications.

e. The examiner should first compare the credit criteria considered in the credit process for each of the approved and denied applications to established underwriting standards, rather than comparing files directly.

f. The examiner should identify any deviations from credit standards for both approved and denied credit requests, and differences in loan terms granted for approved credit requests.

g. The examiner should discuss each instance where deviations from credit standards and terms were noted, but were not explained in the file, with the commercial credit underwriter. Each discussion should be documented.

Step 3. Conduct Targeted Sampling

a. If deviations from credit standards or pricing are not sufficiently explained by other factors either documented in the credit file or the commercial underwriter was not able to provide a reasonable explanation, the examiner should determine if deviations were detrimental to any protected classes of applicants.

b. The examiner should consider employing the same techniques for determining race and gender characteristics of commercial applicants as those outlined in the consumer loan sampling procedures.

c. If it is determined that there are members of one or more prohibited basis groups among commercial credit requests that were not underwritten according to established standards or received less favorable terms, the examiner should select additional commercial loans, where applicants are members of the same prohibited basis group and select similarly situated control group credit requests in order to determine whether there is a pattern or practice of discrimination. These additional files should be selected based on the specific applicant circumstance(s) that appeared to have been viewed differently by lending personnel on a prohibited basis.

d. If there are not enough similarly situated applicants for comparison in the original sample period to draw a reasonable conclusion, the examiner should expand the sample period. The expanded sample period should generally not go beyond the date of the prior examination.

Sampling Guidelines

a. Generally, the task of selecting an appropriate expanded sample of prohibited basis and control group applications for commercial loans will require examiner judgment. The examiner should select a sample that is large enough to be able to draw a reasonable conclusion.

b. The examiner should first select from the applications that were acted on during the initial sample period, but were not included in the initial sample, and select applications from prior time periods as necessary.

c. The expanded sample should include both approved and denied, prohibited basis and control group applications, where similar credit was requested by similar enterprises for similar purposes.

G. Analysis of Potential Discriminatory “Redlining”

Overview: For purposes of this analysis, traditional “redlining” is a form of illegal disparate treatment in which an institution provides unequal access to credit, or unequal terms of credit, because of the race, color, national origin, or other prohibited characteristic(s) of the residents of the area in which the credit seeker resides or will reside or in which the residential property to be mortgaged is located. Redlining may also include “reverse redlining,” the practice of targeting certain borrowers or areas with less advantageous products or services based on prohibited characteristics.

The redlining analysis may be applied to determine whether, on a prohibited basis:

• an institution fails or refuses to extend credit in certain areas;
• an institution targets certain borrowers or certain areas with less advantageous products:
• an institution makes loans in such an area but at a restricted level or upon less-favorable terms or conditions as compared to contrasting areas; or
• an institution omits or excludes such an area from efforts to market residential loans or solicit customers for residential credit.

This guidance focuses on possible discrimination based on race or national origin. The same analysis could be adapted to evaluate relative access to credit for areas of geographical concentration on other prohibited bases — for example, age.

NOTE: It is true that neither the Equal Credit Opportunity Act (ECOA) nor the Fair Housing Act (FHAct) specifically uses the term “redlining.” However, federal courts as well as agencies that have enforcement responsibilities for the FHAct, have interpreted it as prohibiting institutions from having different marketing or lending practices for certain geographic areas, compared to others, where the purpose or effect of such differences would be to discriminate on a prohibited basis. Similarly, the ECOA would prohibit treating applicants for credit differently on the basis of differences in the racial or ethnic composition of their respective neighborhoods. 

Like other forms of disparate treatment, redlining can be proven by overt or comparative evidence. If any written or oral policy or statement of the institution (see risk factors R6-10 in Part I, above) suggests that the institution links the racial or national origin character of an area with any aspect of access to or terms of credit, the examiners should refer to the guidance in Section B of this Part III, on documenting and evaluating overt evidence of discrimination.

Overt evidence includes not only explicit statements, but also any geographical terms used by the institution that would, to a reasonable person familiar with the community in question, connote a specific racial or national origin character. For example, if the principal information conveyed by the phrase “north of 110th Street” is that the indicated area is principally occupied by Hispanics, then a policy of not making credit available “north of 110th Street” is overt evidence of potential redlining on the basis of national origin.

Overt evidence is relatively uncommon. Consequently, the redlining analysis usually will focus on comparative evidence (similar to analyses of possible disparate treatment of individual customers) in which the institution’s treatment of areas with contrasting racial or national origin characters is compared.

When the scoping process (including consultation within an agency as called for by agency procedures) indicates that a redlining analysis should be initiated, examiners should complete the following steps of comparative analysis:

1. Identify and delineate any areas within the institution’s CRA assessment area and reasonably expected market area for residential products that have a racial or national origin character;
2. Determine whether any minority area identified in Step 1 appears to be excluded, under-served, selectively excluded from marketing efforts, or otherwise less-favorably treated in any way by the institution;
3. Identify and delineate any areas within the institution’s CRA assessment area and reasonably expected market area for residential products that are non-minority in character and that the institution appears to treat more favorably;
4. Identify the location of any minority areas located just outside the institution’s CRA assessment area and market area for residential products, such that the institution may be purposely avoiding such areas;
5. Obtain the institution’s explanation for the apparent difference in treatment between the areas and evaluate whether it is credible and reasonable; and

6. Obtain and evaluate other information that may support or contradict interpreting identified disparities to be the result of intentional illegal discrimination.

These steps are discussed in detail below.

Using Information Obtained During Scoping

Although the six tasks listed are presented below as examination steps in the order given above, examiners should recognize that a different order may be preferable in any given examination. For example, the institution’s explanation (Step 5) for one of the policies or patterns in question may already be documented in the CRA materials reviewed (Step 1) and the CRA examiners may already have verified it, which may be sufficient for purposes of the redlining analysis.

As another example, as part of the scoping process, the examiners may have reviewed an analysis of the geographic distribution of the institution’s loan originations with respect to the racial and national origin composition of census tracts within its CRA assessment or residential market area. Such analysis might have documented the existence of significant discrepancies between areas, by degree of minority concentration, in loans originated (risk factor R1), approval/denial rates (risk factor R2), and/or rates of denials because of insufficient collateral (risk factor R3). In such a situation in which the scoping process has produced a reliable factual record, the examiners could begin with Step 5 (obtaining an explanation) of the redlining analysis below.

In contrast, when the scoping process only yields partial or questionable information, or when the risk factors on which the redlining analysis is based on complaints or allegations against the institution, Steps 1-4 must be addressed.

Comparative analysis for redlining

Step 1. Identify and delineate any areas within the institution’s CRA assessment area and reasonably expected market area for residential products that are of a racial or national origin minority character.

NOTE: The CRA assessment area can be a convenient unit for redlining analysis because information about it typically already is in hand. However, the CRA assessment area may be too limited. The redlining analysis focuses on the institution’s decisions about how much access to credit to provide to different geographical areas. The areas for which those decisions can best be compared are areas where the institution actually marketed and provided credit and where it could reasonably be expected to have marketed and provided credit. Some of those areas might be beyond or otherwise different from the CRA assessment area. 

If there are no areas identifiable for their racial or national origin minority character within the institution’s CRA assessment area or reasonably expected market area for residential products, a redlining analysis is not appropriate. (If there is a substantial but dispersed minority population, potential disparate treatment can be evaluated by a routine comparative file review of applicants.)

This step may have been substantially completed during scoping, but unresolved matters may remain. (For example, several community spokespersons may allege that the institution is redlining, but disagree in defining the area). The examiners should:

a. Describe as precisely as possible why a specific area is recognized in the community (perceptions of residents, etc.) and/or is objectively identifiable (based on census or other data) as having a particular racial or national origin minority character.

• The most obvious identifier is the predominant race or national origin of the residents of the area. Examiners should document the percentages of racial or national origin minorities residing within the census tracts that make up the area. Analyzing racial and national origin concentrations in quartiles (such as 0 to <=25%, >25% to < = 50%, >50% to <= 75%, and >75%) or based on majority concentration (0 to <=50%, and >50%) may be helpful. However, examiners should bear in mind that it is illegal for the institution to consider a prohibited factor in any way. For example, an area or neighborhood may only have a minority population of 20%, but if the area’s concentration appears related to lending practices, it would be appropriate to use that area’s level of concentration in the analysis. Contacts with community groups can be helpful to learn whether there are such subtle features of racial or ethnic character within a particular neighborhood.
• Geographical groupings that are convenient for CRA may obscure racial patterns. For example, an underserved, low-income, predominantly minority neighborhood that lies within a larger low-income area that primarily consisted of non-minority neighborhoods may seem adequately served when the entire low-income area is analyzed as a unit. However, a racial pattern of underservice to minority areas might be revealed if the low-income minority neighborhood shared a border with an underserved, middle-income, minority area and those two minority areas were grouped together for purposes of analysis.

b. Describe how the racial or national origin character changes across the suspected redlining area’s various boundaries.

c. Document or estimate the demand for credit, within the minority area. This may include the applicable demographics of the area, including the percentage of homeowners, the median house value, median family income, or the number of small businesses, etc. Review the institution’s non-originated loan applications from the suspected redlined areas. If available, review aggregate institution data for loans originated and applications received from the suspected redlined areas. Community contacts may also be helpful in determining the demand for such credit. If the minority area does not have a significant amount of demand for such credit, the area is not appropriate for a redlining analysis.

Step 2. Determine whether any minority area identified in Step 1 is excluded, under-served, selectively excluded from marketing efforts, or otherwise less-favorably treated in any way by the institution. 

The examiners should begin with the risk factors identified during the scoping process. The unfavorable treatment may have been substantially documented during scoping and needs only to be finished in this step. If not, this step will verify and measure the extent to which HMDA data show the minority areas identified in Step 1 to be underserved and/or how the institution’s explicit policies treat them less favorably.

a. Review prior CRA lending test analyses to learn whether they have identified any excluded or otherwise under- served areas or other significant geographical disparities in the institution’s lending. Determine whether any of those are the minority areas identified in Step 1.

b. Learn from the institution itself whether, as a matter of policy, it treats any separate or distinct geographical areas within its marketing or service area differently from other areas. This may have been done completely or partially during scoping analysis related to risk factors R5-R9. The differences in treatment can be in marketing, products offered, branch operations (including the services provided and the hours of operation), appraisal practices, application processing, approval requirements, pricing, loan conditions, evaluation of collateral, or any other policy or practice materially related to access to credit. Determine whether any of those less-favored areas are the minority areas identified in Step 1.

c. Obtain from the institution: (i) its reasons for such differences in policy, (ii) how the differences are implemented, and (iii) any specific conditions that must exist in an area for it to receive the particular treatment (more favorable or less favorable) that the institution has indicated.

Step 3. Identify and delineate any areas within the institution’s CRA assessment area and reasonably expected market area for residential products that are non-minority in character and that the institution appears to treat more favorably. 

To the extent not already completed during scoping:

a. Document the percentages of control group and of racial or national origin minorities residing within the census tract(s) that comprise(s) the non-minority area.

b. Document the nature of the housing stock in the area.

c. Describe, to the extent known, how the institution’s practices, policies, or its rate of lending change from less-to more-favorable as one leaves the minority area at its various boundaries. (Examiners should be particularly attentive to instances in which the boundaries between favored and disfavored areas deviate from boundaries the institution would reasonably be expected to follow, such as political boundaries or transportation barriers.)

d. Examiners should particularly consider whether, within a large area that is composed predominantly of racial or national origin minority households, there are enclaves that are predominantly non-minority or whether, along the area’s borders, there are irregularities where the non- minority group is predominant. As part of the overall comparison, examiners should determine whether credit access within those small non-minority areas differs from credit access in the larger minority area.

Step 4. Identify the location of any minority areas located just outside the institution’s CRA assessment area and market area for residential products, such that the institution may be purposely avoiding such areas. 

Review the analysis from prior CRA examinations of whether the assessment area appears to have been influenced by prohibited factors. If there are minority areas that the institution excluded from the assessment area improperly, consider whether they ought to be included in the redlining analysis. Analyze the institution’s reasonably expected market area in the same manner.

Step 5. Obtain the institution’s explanation for the apparent difference in treatment between the areas and evaluate whether it is credible and reasonable. 

This step completes the comparative analysis by soliciting from the institution any additional information not yet considered by the examiners that might show that there is a nondiscriminatory explanation for the apparent disparate treatment based on race or ethnicity.

For each matter that requires explanation, provide the institution full information about what differences appear to exist in how it treats minority and non-minority areas, and how the examiners reached their preliminary conclusions at this stage of the analysis.

a. Evaluate whether the conditions identified by the institution in Step 2 as justifying more favorable treatment pursuant to institutional policy existed in minority neighborhoods that did not receive the favorable treatment called for by institutional policy. If there are minority areas for which those conditions existed, ask the institution to explain why the areas were treated differently despite the similar conditions.

b. Evaluate whether the conditions identified by the institution in Step 2 as justifying less favorable treatment pursuant to institutional policy existed in non-minority neighborhoods that received favorable treatment nevertheless. If there are non-minority areas for which those conditions existed, ask the institution to explain why those areas were treated differently, despite the similar conditions.

c. Obtain explanations from the institution for any apparent differences in treatment observed by the examiners but not called for by the institution’s policies:

• If the institution’s explanation cites any specific conditions in the non-minority area(s) to justify more favorable treatment, determine whether the minority area(s) identified in Step 1 satisfied those conditions. If there are minority areas for which those conditions existed, ask the institution to explain why the areas were treated differently despite the similar conditions.
• If the institution’s explanation cites any specific conditions in the minority area(s) to justify less favorable treatment, determine whether the non- minority area(s) had those conditions. If there are non-minority areas for which those conditions existed, ask the institution to explain why those areas were treated differently, despite the similar conditions.

d. Evaluate the institution’s responses by applying appropriate principles selected from the Appendix on Evaluating Responses to Evidence of Disparate Treatment.

Step 6. Obtain and evaluate specific types of other information that may support or contradict a finding of redlining. 

As a legal matter, discriminatory intent can be inferred simply from the lack of a legitimate explanation for clearly less- favorable treatment of racial or national origin minorities. Nevertheless, if the institution’s explanations do not adequately account for a documented difference in treatment, the examiners should consider additional information that might support or contradict the interpretation that the difference in treatment constituted redlining.

a. Comparative file review. If there was a comparative file review conducted in conjunction with the redlining examination, review the results; or, if it is necessary and feasible to do so to clarify what appears to be discriminatory redlining, compare denied applications from within the suspected redlining area to approved applications from the contrasting area.

• Learn whether there were any denials of fully qualified applicants from the suspected redlining area. If so, that may support the view that the institution was avoiding doing business in the area.
• Learn whether the file review identified instances of illegal disparate treatment against applicants of the same race or national origin as the suspected redlining area. If so, that may support the view that the institution was avoiding doing business with applicants of that group, such as the residents of the suspected redlining area. Learn whether any such identified victims applied for transactions in the suspected redlining area.
• If there are instances of either of the above, identify denied non-minority residents, if any, of the suspected redlining area and review their application files to learn whether they appear to have been treated in an irregular or less favorable way. If so, that may support the view that the character of the area rather than of the applicants themselves appears to have influenced the credit decisions.
• Review withdrawn and incomplete applications for the suspected redlining area, if those can readily be identified from the HMDA-LAR, and learn whether there are reliable indications that the institution discouraged those applicants from applying. If so, that may support the view that the institution was avoiding conducting business in the area and may constitute evidence of a violation of Section 1002.4(b) of Regulation B. Conversely, if the comparisons of individual transactions show that the institution treated minority and non-minority applicants within and outside the suspected redlining area similarly, that tends to contradict the conclusion that the institution avoided the areas because it had minority residents.

b. Interviews of third parties. The perspectives of third parties will have been taken into account to some degree through the review of available materials during scoping. Later in the examination, in appropriate circumstances, information from third parties may help determine whether the institution’s apparent differences in treatment of minority and non-minority areas constitute redlining.

• Identify persons (such as housing or credit counselors, home improvement contractors, or real estate and mortgage brokers) who may have extensive experience dealing with credit applicants from the suspected redlined area.
• After obtaining appropriate authorization and guidance from your agency, interview those persons to learn of their first-hand experiences related to:
  • oral statements or written indications by an institution’s representatives that loan applications from a suspected redlined area were discouraged;
  • whether the institution treated applicants from the suspected redlining area as called for in its own procedures (as the examiners understand them) and/or whether it treated them similarly to applicants from non-minority areas (as the examiners are familiar with those transactions);
  • any unusual delays or irregularities in loan processing for transactions in the suspected redlining area; and
  • differences in the institution’s pricing, loan conditions, property valuation practices, etc., in the suspected redlining area compared to contrasting areas.

Also, learn from the third parties the names of any consumers they described as having experienced the questionable behavior recounted by the third party, and consider contacting those consumers.

If third parties witnessed specific conduct by the institution that indicates the institution wanted to avoid business from the area or prohibited basis group in question, this would tend to support interpreting the difference in treatment as intended. Conversely, if third parties report proper treatment or positive actions toward such area or prohibited basis group, this would tend to contradict the view that the institution intended to discriminate.

c. Marketing. A clear exclusion of the suspected redlining area from the institution’s marketing of residential loan products supports the view that the institution did not want to do business in the area. Marketing decisions are affirmative acts to include or exclude areas. Disparities in marketing between two areas may reveal that the institution prefers one to the other. If sufficiently stark and supported by other evidence, a difference in marketing to racially different areas could itself be treated as a redlining violation of the Fair Housing Act. Even below that level of difference, marketing patterns can support or contradict the view that disparities in lending practices were intentional.

• Review materials that show how the institution has marketed in the suspected redlined area and in non- minority areas. Begin with available CRA materials and discuss the issues with CRA examiners, then review other materials as appropriate. The materials may include, for example, the institution’s guidance for the geographical distribution of pre-approved solicitations for credit cards or home equity lines of credit, advertisements in local media or business or telephone directories, business development calls to real estate brokers, and calls by telemarketers.

d. Peer performance. Market share analysis and other comparisons to competitors are insufficient by themselves to prove that an institution engaged in illegal redlining. By the same token, an institution cannot justify its own failure to market or lend in an area by citing other institutions’ failures to lend or market there.

However, an institution’s inactivity in an underserved area where its acknowledged competitors are active would tend to support the interpretation that it intends to avoid doing business in the area. Conversely, if it is as active as other institutions that would suggest that it intends to compete for, rather than avoid, business in the area.

• Develop a list of the institution’s competitors.
• Learn the level of lending in the suspected redlining area by competitors. Check any public evaluations of similarly situated competitors obtained by the CRA examiners as part of evaluating the performance context or obtain such evaluations independently.

e. Institution’s record. Request from the institution information about its overall record of serving or attempting to serve the racial or national origin minority group with which the suspected redlining area is identified. The record may reveal intent to serve that group that tends to contradictthe view that the institution intends to discriminate against the group.

NOTE: For any information that supports interpreting the situation as illegal discrimination, obtain and evaluate an explanation from the institution as called for in Part IV.

H. Analysis of Potential Discriminatory Marketing Practices.

When scoping identifies significant risk factors (M1-M7) related to marketing, examiners should consult their agency’s supervisory staff and experts about a possible marketing discrimination analysis. If the supervisory staff agrees to proceed, the examiners should collect information as follows:

Step 1. Identify the institution’s marketing initiatives.

a. Pre-approved solicitations 

• Determine whether the institution sends out pre- approved solicitations:
  • For home purchase loans,
  • For home improvement loans, or
  • For refinance loans.
• Determine how the institution selects recipients for such solicitations
  • Learn from the institution its criteria for such selections.
  • Review any guidance or other information the institution provided credit reporting companies or other companies that supply such lists.

b. Media Usage 

• Determine in which newspapers and broadcast media the institution advertises.
  • Identify any racial or national origin identity associated with those media.
  • Determine whether those media focus on geographical communities of a particular racial or national origin character.
• Learn the institution’s strategies for geographic and demographic distribution of advertisements.
• Obtain and review copies of the institution’s printed advertising and promotional materials.
• Determine what criteria the institution communicates to media about what is an attractive customer or an attractive area to cultivate business.
• Determine whether advertising and marketing are the same to racial and national origin minority areas as compared to non-minority areas.

c. Self-produced promotional materials 

• Learn how the institution distributes its own promotional materials, both methods and geographical distribution.
• Learn what the institution regards as the target audience(s) for those materials.

d. Realtors, brokers, contractors, and other intermediaries 

• Determine whether the institution solicits business from specific realtors, brokers, home improvement contractors, and other conduits.
  • Learn how the institution decides which intermediaries it will solicit.
  • Identify the parties contacted and determine the distribution between minority and non-minority areas.
  • Obtain and review the types of information the institution distributes to intermediaries.
  • Determine how often the institution contacts intermediaries.
  • Determine what criteria the institution communicates to intermediaries about the type of customers it seeks or the nature of the geographic areas in which it wishes to do business.

e. Telemarketers or predictive dialer programs 

• Learn how the institution identifies which consumers to contact, and whether the institution sets any parameters on how the list of consumers is compiled.

Step 2. Determine whether the institution’s activities show a significantly lower level of marketing effort toward minority areas or toward media or intermediaries that tend to reach minority areas.

Step 3. If there is any such disparity, document the institution’s explanation for it.

For additional guidance, refer to Part C of the Special Analyses section in the Appendix.

I. Credit Scoring.

If the scoping process results in the selection of a focal point that includes a credit or mortgage scored loan product, refer to the Considering Automated Underwriting and Credit Scoring section of the Appendix.

If the institution utilizes a credit scoring program which scores age for any loan product selected for review in the scoping stage, either as the sole underwriting determinant or only as a guide to making loan decisions, refer to Part E of the Considering Automated Underwriting and Credit Scoring section of the Appendix.

Part IV — Obtaining and Evaluating Responses From the Institution and Concluding the Examination

Step 1. Present to the institution’s management for explanation:

a. Any overt evidence of disparate treatment on a prohibited basis.

b. All instances of apparent disparate treatment (e.g., overlaps) in either the underwriting of loans or in loan prices, terms, or conditions.

c. All instances of apparent disparate treatment in the form of discriminatory steering, redlining, or marketing policies or practices.

d. All instances where a denied prohibited basis applicant was not afforded the same level of assistance or the same benefit of discretion as an approved control group applicant who was no better qualified with regard to the reason for denial.

e. All instances where a prohibited basis applicant received conspicuously less favorable treatment by the institution than was customary from the institution or was required by the institution’s policy.

f. Any statistically significant average difference in either the frequency or amount of pricing disparities between control group and prohibited basis group applicants.

Explain that unless there are legitimate, nondiscriminatory explanations for each of the preliminary findings of discrimination identified in this Part, the agency could conclude that the institution is in violation of the applicable fair lending laws.

Step 2. Document all responses that have been provided by the institution, not just its “best” or “final” response. Document each discussion with dates, names, titles, questions, responses, any information that supports or undercuts the institution’s credibility, and any other information that bears on the issues raised in the discussion(s).

Step 3. Evaluate whether the responses are consistent with previous statements, information obtained from file review, documents, reasonable banking practices, and other sources, and satisfy common-sense standards of logic and credibility.

a. Perform follow-up file reviews and comparative analyses, as necessary, to determine the accuracy and credibility of the institution’s explanations.

b. Refer to Evaluating Responses to Evidence of Disparate Treatment in the Appendix for guidance as to common types of responses.

Step 4. If, after completing Steps 1–3 above, you conclude that the institution has failed to adequately demonstrate that one or more apparent violations had a legitimate nondiscriminatory basis or were otherwise lawful, prepare a documented list or discussion of violations, or a draft examination report, as prescribed by agency directives.

Step 5. Consult with agency supervisory staff regarding whether (a) any violations should be referred to the Departments of Justice or Housing and Urban Development and (b) enforcement action should be undertaken by your agency.

References

FIL-29-2023 Interagency Guidance on Third-Party Relationships: Risk Management; 

FIL-3-2021 : FDIC Adopts Rule on the Role of Supervisory Guidance; 

FDIC Final Rule : Role of Supervisory Guidance 

FIL-5-2015 : Statement on Providing Banking Services; and 

Part 364 : Standards for Safety and Soundness 

Introduction

This Appendix offers a full range of information that might conceivably be brought to bear in an examination. In that sense, it is a “menu” of resources to be considered and selected from, depending on the nature and scope of the examination being conducted.

Compliance Management Analysis Checklist

This checklist is for use in conjunction with Part II of these procedures as a device for examiners to evaluate the strength of an institution’s compliance program in terms of its capacity to prevent, and to identify and self-correct fair lending violations in connection with the products or issues selected for analysis. The checklist is not intended to be an absolute test of an institution’s compliance management program. Programs containing all or most of the features described in the list may nonetheless be flawed for other reasons; conversely, a compliance program that encompasses only a portion of the factors listed below may nonetheless adequately support a strong program under appropriate circumstances. In short, the examiner must exercise his or her best judgment in utilizing this list and in assessing the overall quality of an institution’s efforts to ensure fair lending compliance.

If the transactions within the proposed scope are covered by a listed preventive measure, and the answer is “Yes”, check the box in the first column. You may then reduce the intensity (mainly the sample size) of the planned comparative file review to the degree that the preventive measures cover transactions within the proposed scope. Document your findings in sufficient detail to justify any resulting reduction in the intensity of the examination.

You are not required to learn whether preventive measures apply to specific products outside the proposed scope. However, if the information you have obtained shows that the measure is a general practice of the institution, and thus applies to all loan products, check the box in the second column in order to assist future examination planning.

Preventive Measures

Determine whether policies and procedures exist that tend to prevent illegal disparate treatment in the transactions you plan to examine. There is no legal or agency requirement for institutions to conduct these activities. The absence of any of these policies and practices is never, by itself, a violation.

1. Lending Practices and Standards

2. Compliance Audit Function: Does the Institution Attempt to Detect Prohibited Disparate Treatment by Self-Test or Self-Evaluation?

NOTE: A self-test is any program, practice or study that is designed and specifically used to assess the institution’s compliance with the ECOA and the Fair Housing Act. It creates data or factual information that is not otherwise available and cannot be derived from loan, application or other records related to credit transactions (12 CFR 1002.15(b)(1) and (24 CFR 100.141). The report, results, and many other records associated with a self-test are privileged unless an institution voluntarily discloses the report or results or otherwise forfeits the privilege. See 12 CFR 1002.15(b)(2) and 24 CFR 100.142(a) for a complete listing of the types of information covered by the privilege. A self-evaluation, while generally having the same purpose as a self-test, does not create any new data or factual information, but uses data readily available in loan or application files and other records used in credit transactions and, therefore, does not meet the self-test definition. See Using Self-Tests and Self-Evaluations to Streamline the Examination in this Appendix for more information about self-tests and self-evaluations.

While you may request the results of self-evaluations, you should not request the results of self-tests or any of the information listed in 12 CFR 1002.15(b)(2) and 24 CFR 100.142(a). If an institution discloses the self-test report or results to its regulator, it will lose the privilege. The following items are intended to obtain information about the institution’s approach to self-testing and self-evaluation, not the findings. Complete the checklist below for each self-evaluation and each self-test, where the institution voluntarily discloses the report or results. Evaluating the results of self-evaluations and voluntarily disclosed self-tests is described in Using Self-Tests and Self-Evaluations to Streamline the Examination in the Appendix.

Mark the box if the answer is “yes” for the transactions within the scope.

3. Corrective Measures

Considering Automated Underwriting and Credit Scoring

These procedures are designed to help an examiner draw and support fair lending conclusions in situations involving automated underwriting or credit scoring.

A. Structure and Organization of the Scoring System

Determine the utilization of credit scoring at the institution including

1. For each customized credit scoring model or scorecard for any product, or for any credit scoring model used in connection with a product held in portfolio, identify and obtain:
   1. The number and inter-relationship of each model or scorecard applied to a particular product;
   2. The purposes for which each scorecard is employed (e.g., approval decision, set credit limits, set pricing, determine processing requirements, etc.);
   3. The developer of each scorecard used (e.g., in-house department, affiliate, independent vendor name) and describe the development population utilized;
   4. The types of monitoring reports generated (including front-end, back-end, and account management), the frequency of generation and recent copies of each;
   5. All policies applicable to the use of credit scoring;
   6. Training materials and programs on credit scoring for employees, agents and brokers involved in any aspect of retail lending;
   7. Any action taken to revalidate or re-calibrate any model or scorecard used during the exam period and the reason(s) why;
   8. The number of all high-side and low-side overrides for each type of override occurring during the exam period and any guidance given to employees on their ability to override;
   9. All cutoffs used for each scorecard throughout the examination period and the reasons for the cutoffs and any change made during the exam period;
   10. All variables scored by each product’s scorecard(s) and the values that each variable may take; and
   11. The method used to select for disclosure those adverse action reasons arising from application of the model or scorecard.
2. For each judgmental underwriting system that includes as an underwriting criterion a standard credit bureau or secondary market credit score, identify:
   1. The vendor of each credit score and any vendor recommendation or guidance on the usage of the score relied upon by the institution;
   2. The institution’s basis for using the particular bureau or secondary market score and the cutoff standards for each product’s underwriting system and the reasons for the cutoffs and any changes to the same during the exam period;
   3. The number of exceptions or overrides made to the credit score component of the underwriting criteria and the basis for those exceptions or overrides, including any guidance given to employees on their ability to depart from credit score underwriting standards; and
   4. Types of monitoring reports generated on the judgmental system or its credit scoring component (including front-end, back-end, differential processing), the frequency of generation and recent copies of each.

B. Adverse Action Disclosure Notices

Determine the methodology used to select the reasons why adverse action was taken on a credit application denied on the basis of the applicant’s credit score. Compare the methodology used to the examples recited in the Commentary to Regulation B and decide acceptability against that standard. Identify any consumer requests for reconsideration of credit score denial reasons and review the action taken by management for consistency across applicant groups.

Where a credit score is used to differentiate application processing, and an applicant is denied for failure to attain a judgmental underwriting standard that would not be applied if the applicant had received a better credit score (thereby being considered in a different—presumably less stringent—application processing group), ensure that the adverse action notice also discloses the bases on which the applicant failed to attain the credit score required for consideration in the less stringent processing group.

C. Disparate Treatment in the Application of Credit Scoring Programs

1. Determine what controls and policies management has implemented to ensure that the institution’s credit scoring models or credit score criteria are not applied in a discriminatory manner, in particular:
   1. Examine institution guidance on using the credit scoring system, on handling overrides and on processing applicants and how well that guidance is understood and observed by the targeted employees and monitored for compliance by management; and
   2. Examine institution policies that permit overrides or that provide for different processing or underwriting requirements based on geographic identifiers or borrower score ranges to assure that they do not treat protected group applicants differently than other similarly situated applicants.
2. Evaluate whether any of the bases for granting credit to control group applicants who are low-side overrides are applicable to any prohibited basis denials whose credit score was equal to or greater than the lowest score among the low-side overrides. If such cases are identified, obtain and evaluate management’s reason for why such different treatment is not a fair lending violation.
3. Evaluate whether any of the bases for denying credit to any prohibited basis applicants who are high-side overrides are applicable to any control group approvals whose credit score was equal to or less than the highest score among the prohibited basis high-side overrides. If such cases are identified, obtain and evaluate management’s reason for why such different treatment is not a fair lending violation.
4. If credit scores are used to segment applicants into groups that receive different processing or are required to meet additional underwriting requirements (e.g., “tiered risk underwriting”), perform a comparative file review, or confirm the results and adequacy of management’s comparative file review, that evaluates whether all applicants within each group are treated equally.

D. Credit Scoring Systems that Include Age

Regulation B expressly requires the initial validation and periodic revalidation of a credit scoring system that considers age. There are two ways a credit scoring system can consider age: 1) the system can be split into different scorecards depending on the age of the applicant; and 2) age may be directly scored as a variable. Both features may be present in some systems. Regulation B requires that all credit scoring systems that consider age in either of these ways must be validated (in the language of the regulation, empirically derived, demonstrably and statistically sound (EDDSS)).

1. Age-Split Scorecards: If a system is split into only two cards and one card covers a wide age range that encompasses elderly applicants (applicants 62 or older), the system is treated as considering, but not scoring, age. Typically, the younger scorecard in an age-split system is used for applicants under a specific age between 25 and 30. It de-emphasizes factors such as the number of trade lines and the length of employment, and increases the negative weight of any derogatory information on the credit report. Systems such as these do not raise the issue of assigning a negative factor or value to the age of an elderly applicant. However, if age is directly scored as a variable (whether or not the system is age-split), or if elderly applicants are included in a card with a narrow age range in an age-split system, the system is treated as scoring age.
2. Scorecards that Score Age: If a scorecard scores age directly, in addition to meeting the EDDSS requirement, the creditor must ensure that the age of an elderly applicant is not assigned a negative factor or value. (See the staff commentary at 12 CFR 1002.2(p) and 1002.6(b)(2)). A negative factor or value means utilizing a factor, value, or weight that is less favorable than the creditor’s experience warrants or is less favorable than the factor, value, or weight assigned to the most favored age group below the age of 62 (12 CFR 1002.2(v)).

E. Examination for Empirical Derivation and Statistical Soundness

Regulation B requires credit scoring systems that use age to be empirically derived, and demonstrably and statistically sound. This means that they must fulfill the requirements of 12 CFR 1002.2(p)(1)(i) - (iv). Obtain documentation provided by the developer of the system and consult the agency’s most recent guidance for making that determination.

Evaluating Responses to Evidence of Disparate Treatment

A. Responses to Comparative Evidence of Disparate Treatment

The following are responses that an institution may offer — separately or in combination — to attempt to explain that the appearance of illegal disparate treatment is misleading, and that no violation has in fact occurred. The responses, if true, may rebut the appearance of disparate treatment. The examiners must evaluate the validity and credibility of the responses.

1. The institution’s personnel were unaware of the prohibited basis identity of the applicant(s)

   If the institution claims to have been unaware of the prohibited basis identity (race, etc.) of an applicant or neighborhood, ask it to show that the application in question was processed in such a way that the institution’s staff that made the decisions could not have learned the prohibited basis identity of the applicant. 

   If the product is one for which the institution maintains prohibited basis monitoring information, assume that all employees could have taken those facts into account. Assume the same when there was face-to-face contact between any employee and the consumer. 

   If there are other facts about the application from which an ordinary person would have recognized the applicant’s prohibited basis identity (for example, the surname is an easily recognizable Hispanic one), assume that the institution’s staff drew the same conclusions. If the racial character of a community is in question, ask the institution to provide persuasive evidence why its staff would not know the racial character of any community in its service area.

2. The difference in treatment was justified by differences in the applicants (applicants not “similarly situated”) 

   Ask the institution to account for the difference in treatment by pointing out a specific difference between the applicants’ qualifications, or some factor not captured in the application but that legitimately makes one applicant more or less attractive to the institution, or some non-prohibited factor related to the processing of their applications. The difference identified by the institution must be one that is important enough to justify the difference in treatment in question, not a meaningless difference.

   The factors commonly cited to show that applicants are not similarly situated fall into two groups: those that can be evaluated by how consistently they are handled in other transactions, and those that cannot be evaluated in that way.

   1. Verifying “not similarly situated” explanations by consistency

      The appearance of disparate treatment remains if a factor cited by the institution to justify favorable treatment for a control group applicant also exists for an otherwise similar prohibited basis applicant who was treated unfavorably. Similarly, the appearance of disparate treatment remains if a factor cited by the institution to justify unfavorable treatment for a prohibited basis applicant also exists for a control group applicant that got favorable treatment. If this is not so, ask the institution to document that the factor cited in its explanation was used consistently for control group and prohibited basis applicants.

      • Among the responses that should be evaluated this way are:
        • Customer relationship. Ask the institution to document that a customer relationship was also sometimes considered to the benefit of prohibited basis applicants and/or that its absence worked against control group customers.
        • “Loan not saleable or insurable.” If file review is still in progress, be alert for loans approved despite the claimed fatal problem. At a minimum, ask the institution to be able to produce the text of the secondary market or insurer’s requirement in question.
        • Difference in standards or procedures between branches or underwriters. Ask the institution to provide transactions documenting that each of the two branches or underwriters applied its standards or procedures consistently to both prohibited basis and control group applications it processed, and that each served similar proportions of the prohibited basis group.
        • Difference in applying the same standard (difference in “strictness”) between underwriter, branches, etc. Ask the institution to provide transactions documenting that the stricter employee, branch, etc., was strict for both prohibited basis and control group applicants and that the other was lenient for both, and that each served similar proportions of the prohibited basis group. The best evidence of this would be prohibited basis applicants who received favorable treatment from the lenient branch and control group applicants who received less favorable treatment from the “strict” branch.
        • Standards or procedures changed during period reviewed. Ask the institution to provide transactions documenting that during each period the standards were applied consistently to both prohibited basis and control group applicants.
        • Employee misunderstood standard or procedure. Ask the institution to provide transactions documenting that the misunderstanding influenced both prohibited basis and control group applications. If that is not available, find no violation if the misunderstanding is a reasonable mistake.
   2. Evaluating “not similarly situated” explanations by other means.
      • If consistency cannot be evaluated, consider an explanation favorably even without examples of its consistent use if:
        • The factor is documented to exist in (or be absent from) the transactions, as claimed by the institution;
        • The factor is one a prudent institution would consider and is consistent with the institution’s policies and procedures;
        • File review found no evidence that the factor is applied selectively on a prohibited basis (in other words, the institution’s explanation is “not inconsistent with available information”); and
        • The institution’s description of the transaction is generally consistent and reasonable.
      • Some factors that may be impossible to compare for consistency are:
        • Unusual underwriting standard. Ask the institution to show that the standard is prudent. If the standard is prudent and not inconsistent with other information, accept this explanation even though there is no documentation that it is used consistently.
        • “Close calls.” The institution may claim that underwriters’ opposite decisions on similar applicants reflects legitimate discretion that the examiners should not second guess. That is not an acceptable explanation for identical applicants with different results, but is acceptable when the applicants have differing strengths and weaknesses that different underwriters might reasonably weigh differently. However, do not accept the explanation if other files reveal that these “strengths” or “weaknesses” are counted or ignored selectively on a prohibited basis.
        • “Character loan.” Expect the institution to identify a specific history or specific facts that make the applicant treated favorably a better risk than those treated less favorably.
        • “Accommodation loan.” There are many legitimate reasons that may make a transaction appealing to an institution apart from the familiar qualifications demanded by the secondary market and insurers. For example, a consumer may be related to or referred by an important customer, be a political or entertainment figure who would bring prestige to the institution, be an employee of an important business customer, etc. It is not illegal discrimination to make a loan to an otherwise unqualified control group applicant who has such attributes while denying a loan to an otherwise similar prohibited basis applicant without them. However, be skeptical when the institution cites reasons for “accommodations” that an ordinary prudent institution would not value.
        • “Gut feeling.” Be skeptical when institutions justify an approval or denial by a general perception or reaction to the consumer. Such a perception or reaction may be linked to a racial or other stereotype that legally must not influence credit decisions. Ask whether any specific event or fact generated the reaction. Often, the institution can cite something specific that made him or her confident or uncomfortable about the consumer. There is no discrimination if it is credible that the institution indeed considered such a factor and did not apply it selectively on a prohibited basis.
   3. Follow up customer contacts
      • If the institution’s explanation of the handling of a particular transaction is based on consumer traits, actions, or desires not evident from the file, consider obtaining agency authorization to contact the consumer to verify the institution’s description. Such contacts need not be limited to possible victims of discrimination, but can include control group applicants or other witnesses.

3. The different results stemmed from an inadvertent error

   If the institution claims an identified error such as miscalculation or misunderstanding caused the favorable or unfavorable result in question, evaluate whether the facts support the assertion that such an event occurred.

   If the institution claims an unidentified error caused the favorable or unfavorable result in question, expect the institution to provide evidence that discrimination is inconsistent with its demonstrated conduct, and therefore that discrimination is the less logical interpretation of the situation. Consider the context (as described below).

4. The apparent disparate treatment on a prohibited basis is a misleading portion of a larger pattern of random inconsistencies

   Ask the institution to provide evidence that the unfavorable treatment is not limited to the prohibited basis group and that the favorable treatment is not limited to the control group. Without such examples, do not accept an institution’s unsupported claim that otherwise inexplicable differences in treatment are distributed randomly. 

   If the institution can document that similarly situated prohibited basis group applicants received the favorable treatment in question approximately as frequently and in comparable degree as the control group applicants, conclude there is no violation.

   NOTE: Transactions are relevant to “random inconsistency” only if they are “similarly situated” to those apparently treated unequally.

5. Loan terms and conditions

   The same analyses described in the preceding sections with regard to decisions to approve or deny loans also apply to pricing differences. Risks and costs are legitimate considerations in setting prices and other terms and conditions of loan products. However, generalized reference by the institution to “cost factors” is insufficient to explain pricing differences. 

   If the institution claims that specific borrowers received different terms or conditions because of cost or risk considerations, ask the institution to be able to identify specific risk or cost differences between them.

   If the institution claims that specific borrowers received different terms or conditions because they were not similarly situated as negotiators, consider whether application records might provide relevant evidence. If the records are not helpful, consider seeking authorization to contact consumers to learn whether the institution in fact behaved comparably toward prohibited basis and control group consumers. The contacts would be to learn such information as the institution’s opening quote of terms to the consumer and the progress of the negotiations.

   If the institution responds that an average price difference between the control and prohibited basis groups is based on cost or risk factors, ask it to identify specific risk or cost differences between individual control group applicants with the lowest rates and prohibited basis group applicants with the highest rates that are significant enough to justify the pricing differences between them. If the distinguishing factors cited by the institution are legitimate and verifiable as described in the sections above, remove those applications from the average price calculation. If the average prices for the remaining control group and prohibited basis group members still differ more than minimally, consult agency supervisory staff about further analysis. Findings or violations based on disparate treatment regarding cost or risk factors should be discussed with agency supervisory staff.

B. Responses to Overt Evidence of Disparate Treatment

1. Descriptive references vs. lending considerations 

   A reference to race, gender, etc., does not constitute a violation if it is merely descriptive — for example, “the applicant was young.” In contrast, when the reference reveals that the prohibited factor influenced the institution’s decisions and/or consumer behavior, treat the situation as an apparent violation to which the institution must respond.

2. Personal opinions vs. lending considerations

   If an employee involved with credit availability states unfavorable views regarding a racial group, gender, etc., but does not explicitly relate those views to credit decisions, review that employee’s credit decisions for possible disparate treatment of the prohibited basis group described unfavorably. If there are no instances of apparent disparate treatment, treat the employee’s views as permissible private opinions. Inform the institution that such views create a risk of future violations.

3. Stereotypes related to credit decisions

   There is an apparent violation when a prohibited factor influences a credit decision through a stereotype related to creditworthiness — for example, a loan denial because “a single woman could not maintain a large house.” If the stereotyped beliefs are offered as “explanations” for unfavorable treatment, regard such unfavorable treatment as apparent illegal disparate treatment. If the stereotype is only a general observation unrelated to particular transactions, review that employee’s credit decisions for possible disparate treatment of the prohibited basis group in question. Inform the institution that such views create a risk of future violations.

4. Indirect reference to a prohibited factor 

   If negative views related to creditworthiness are described in non-prohibited terms, consider whether the terms would commonly be understood as surrogates for prohibited terms. If so, treat the situation as if explicit prohibited basis terms were used. For example, an institution’s statement that “It’s too risky to lend north of 110th Street” might be reasonably interpreted as a refusal to lend because of race if that portion of the institution’s lending area north of 110th Street were predominantly black and the area south, white.

5. Lawful use of a prohibited factor

   1. Special Purpose Credit Program (SPCP)

      If an institution claims that its use of a prohibited factor is lawful because it is operating an SPCP, ask the institution to document that its program conforms to the requirements of Regulation B. An SPCP must be defined in a written plan that existed before the institution made any decisions on loan applications under the program. The written plan must:

      • demonstrate that the program will benefit persons who would otherwise be denied credit or receive credit on less favorable terms; and
      • state the time period the program will be in effect or when it will be re-evaluated.

      No provision of an SPCP should deprive people who are not part of the target group of rights or opportunities they otherwise would have. Qualified programs operating on an otherwise-prohibited basis will not be cited as a violation.

      NOTE: Advise the institution that an agency finding that a program is a lawful SPCP is not absolute security against legal challenge by private parties. Suggest that an institution concerned about legal challenge from other quarters use exclusions or limitations that are not prohibited by ECOA or the FHAct, such as “first-time home buyer.”

   2. Second review program

      Such programs are permissible if they do no more than ensure that lending standards are applied fairly and uniformly to all applicants. For example, it is permissible to review the proposed denial of applicants who are members of a prohibited basis group by comparing their applications to the approved applications of similarly qualified individuals who are in the control group to determine if the applications were evaluated consistently.

      Ask the institution to demonstrate that the program is a safety net that merely attempts to prevent discrimination, and does not involve underwriting terms or practices that are preferential on a prohibited basis.

      Statements indicating that the mission of the program is to apply different standards or efforts on behalf of a particular racial or other group constitute overt evidence of disparate treatment. Similarly, there is an apparent violation if comparative analysis of applicants who are processed through the second review and those who are not discloses dual standards related to the prohibited basis.

   3. Affirmative marketing/advertising program:

      Affirmative advertising and marketing efforts that do not involve application of different lending standards are permissible under both the ECOA and the FHAct. For example, special outreach to a minority community would be permissible.

Identifying Marginal Transactions

These procedures are intended to assist an examiner in identifying denied and approved applications that were not either clearly qualified or unqualified, i.e., marginal transactions.

A. Marginal Denials

      Denied applications with any or all the following characteristics are “marginal.” Such denials are compared to marginal approved applications. Marginal denied applications include those that:

• Were close to satisfying the requirement that the adverse action notice said was the reason for denial;
• Were denied by the institution’s rigid interpretation of inconsequential processing requirements;
• Were denied quickly for a reason that normally would take a longer time for an underwriter to evaluate;
• Involved an unfavorable subjective evaluation of facts that another person might reasonably have interpreted more favorably (for example, whether late payments actually showed a “pattern,” or whether an explanation for a break in employment was “credible”);
• Resulted from the institution’s failure to take reasonable steps to obtain necessary information;
• Received unfavorable treatment as the result of a departure from customary practices or stated policies. For example, if it is the institution’s stated policy to request an explanation of derogatory credit information, a failure to do so for a prohibited basis applicant would be a departure from customary practices or stated policies even if the derogatory information seems to be egregious;
• Were similar to an approved control group applicant who received unusual consideration or service, but were not provided such consideration or service;
• Received unfavorable treatment (for example, were denied or given various conditions or more processing obstacles) but appeared fully to meet the institution’s stated requirements for favorable treatment (for example, approval on the terms sought);
• Received unfavorable treatment related to a policy or practice that was vague, and/or the file lacked documentation on the applicant’s qualifications related to the reason for denial or other factor;
• Met common secondary market or industry standards even though failing to meet the institution’s more rigid standards;
• Had a strength that a prudent institution might believe outweighed the weaknesses cited as the basis for denial;
• Had a history of previously meeting a monthly housing obligation equivalent to or higher than the proposed debt; and/or
• Were denied for an apparently “serious” deficiency that might easily have been overcome. For example, an applicant’s total debt ratio of 50 percent might appear grossly to exceed the institutions guideline of 36 percent, but this may in fact be easily corrected if the application lists assets to pay off sufficient non-housing debts to reduce the ratio to the guideline, or if the institution were to count excluded part-time earnings described in the application.

B. Marginal Approvals

      Approved applications with any or all of the following characteristics are “marginal.” Such approvals are compared to marginal denied applications. Marginal approvals include those:

• Whose qualifications satisfied the institution’s stated standard, but very narrowly;
• That bypassed stated processing requirements (such as verifications or deadlines);
• For which stated creditworthiness requirements were relaxed or waived;
• That, if the institution’s own standards are not clear, fell short of common secondary market or industry lending standards;
• That a prudent conservative institution might have denied;
• Whose qualifications were raised to a qualifying level by assistance, proposals, counteroffers, favorable characterizations or questionable qualifications, etc.; and/or
• That in any way received unusual service or consideration that facilitated obtaining the credit.

Potential Scoping Information

As part of the scoping process described in Part I of the procedures, examiners will need to gather documents and information to sufficiently identify their focal points for review. Below is a list of suggested information that examiners may wish to gather internally, as well as from the institution itself.

A. Internal Agency Documents and Records

1. Previous examination reports and related work papers for the most recent Compliance / CRA and Safety and Soundness Examinations.
2. Complaint information.
3. Demographic data for the institution’s community. 

      Comment: The examiner should obtain the most recent agency demographic data, for information on the characteristics of the institution’s assessment/market areas.

B. Information from the institution

      Comment: Prior to beginning a compliance examination, the examiner should request the institution to provide the information outlined below. This request should be made far enough in advance of the on-site phase of the examination to facilitate compliance by the institution. In some institutions, the examiner may not be able to review certain of this information until the on-site examination. The examiner should generally request only those items that correspond to the time period(s) being examined.

Explanatory Notes to Sample Size Tables

1.  Examiners should not follow Table B when conducting a pricing review that involves a regression analysis. Consult with agency supervisory staff for specific protocol in these cases.
2. When performing both underwriting and terms and conditions comparisons, use the same control group approval sample for both tasks.
3. If there are fewer than 5 prohibited basis denials or 20 control group approvals, refer to “Sample Size” instructions in the procedures.
4. “Minimum” and “maximum” sample sizes: select a sample size between the minimum and maximum numbers identified above. Examiners should base the size of their review on the level of risk identified during the preplanning and scoping procedures. Once the sample size has been determined, select individual transactions judgmentally. Refer to procedures.
5. If two prohibited basis groups (e.g., black and Hispanic) are being compared against one control group, select a control group that is 5 times greater than the larger prohibited basis group sample, up to the maximum.
6. Where the institution’s discrimination risk profile identifies significant discrepancies in withdrawal/incomplete activity between control and prohibited basis groups, or where the number of marginal prohibited basis group files available for sampling is small, an examiner may consider supplementing samples by applying the following rules:

• If prohibited basis group withdrawals/incompletes occur after the applicant has received an offer of credit that includes pricing terms, this is a reporting error under Regulation C (the institution should have reported the application as approved but not accepted) and therefore these applications should be included as prohibited basis group approvals in a terms and conditions comparative file analysis.
• If prohibited basis group incompletes occur due to lack of an applicant response with respect to an item that would give rise to a denial reason, then include them as denials for that reason when conducting an underwriting comparative file analysis.

1. Institution’s Compliance Program (For examinations that will include analysis of the institution’s compliance program.)
   1. Organization charts identifying those individuals who have lending responsibilities or compliance, HMDA or CRA responsibilities, together with job descriptions for each such position.
   2. Lists of any pending litigation or administrative proceedings concerning fair lending matters.

   3. Results of self-evaluations or self-tests (where the institution chooses to share self-test results), copies of audit or compliance reviews of the institution’s program for compliance with fair lending laws and regulations, including both internal and independent audits.

       NOTE: The request should advise the institution that it is not required to disclose the report or results of any self-tests of the type protected under amendments to ECOA and the FHAct programs.

   4. Complaint file.
   5. Any written or printed statements describing the institution’s fair lending policies and/or procedures.
   6. Training materials related to fair lending issues including records of attendance.
   7. Records detailing policy exceptions or overrides, exception reporting and monitoring processes.
2. Lending Policies / Loan Volume

   1. Internal underwriting guidelines and lending policies for all consumer and commercial loan products. 

      Comment: If guidelines or policies differ by branch or other geographic location, request copies of each variation.

   2. A description of any credit scoring system(s) in use now or during the exam period.

      Comment: Inquire as to whether a vendor or in-house system is used; the date of the last verification; the factors relied on to construct any in-house system and, if applicable, any judgmental criteria used in conjunction with the scoring system.

   3. Pricing policies for each loan product, and for both direct and indirect loans.

      Comment: The institution should be specifically asked whether its pricing policies for any loan products include the use of “overages”. The request should also ask whether the institution offers any “sub-prime” loan products or otherwise uses any form of risk-based pricing. A similar inquiry should be made regarding the use of any cost-based pricing. If any of these three forms are or have been in use since the last exam, the institution should provide pricing policy and practice details for each affected product, including the institution’s criteria for differentiating between each risk or cost level and any policies regarding overages. Regarding indirect lending, the institution should be asked to provide any forms of agreement (including compensation) with brokers/dealers, together with a description of the roles that both the institution and the dealer/broker play in each stage of the lending process.

   4. A description of each form of compensation plan for all lending personnel and managers.
   5. Advertising copy for all loan products.

   6. The most recent HMDA / LAR, including unreported data if available. 

      Comment: The integrity of the institution’s HMDA-LAR data should be verified prior to the pre-examination analysis.

   7. Any existing loan registers for each non-HMDA loan product. 

      Comment: Loan registers for the 3 month period preceding the date of the examination, together with any available lists of declined loan applicants for the same period should be requested. Registers / lists should contain, to the extent available, the complete name and address of loan applicants and applicable loan terms, including loan amount, interest rate, fees, repayment schedule and collateral codes.

   8. A description of any application or loan-level data bases maintained, including a description of all data fields within the database or that can be linked at the loan-level.

   9. Forms used in the application and credit evaluation process for each loan product. 

      Comment: At a minimum, this request should include all types of credit applications, forms requesting financial information, underwriter worksheets, any form used for the collection of monitoring information, and any quality control or second review forms or worksheets.

   10. Lists of service providers. 

       Comment: Service providers may include: brokers, realtors, real estate developers, appraisers, underwriters, home improvement contractors and private mortgage insurance companies. Request the full name and address and geographic area served by each provider. Also request documentation as to any fair lending requirements imposed on, or commitments required of, any of the institution’s service providers.

   11. Addresses of any Internet Site(s)

       Comment: Internet “Home Pages” or similar sites that an institution may have on the Internet may provide information concerning the availability of credit, or means for obtaining it. All such information must comply with the nondiscrimination requirements of the fair lending laws. In view of the increasing capability to conduct transactions on the Internet, it is extremely important for examiners to review an institution’s Internet sites to ensure that all of the information or procedures set forth therein are in compliance with any applicable provisions of the fair lending statutes and regulations.

3. Community Information
   1. Demographic information prepared or used by the institution.
   2. Any fair lending complaints received and institution responses thereto.

Special Analyses

These procedures are intended to assist examiners who encounter discriminatory pre-application screening and possible discriminatory marketing.

Discriminatory Pre-Application Screening

Obtain an explanation for any:

      Withdrawals by applicants in prohibited basis groups without documentation of consumer intent to withdraw;

      Denials of applicants in prohibited basis groups without any documentation of applicant qualifications; or

      On a prohibited basis, selectively quoting unfavorable terms (for example, high fees or down payment requirements) to prospective applicants, or quoting unfavorable terms to all prospective applicants but waiving such terms for control group applicants. (Evidence of this might be found in withdrawn or incomplete files.)

Obtain explanations for any delays between application and action dates on a prohibited basis

      If the institution cannot explain the situations, examiners should consider obtaining authorization from their agency to contact the consumers to verify the institution’s description of the transactions. Information from the consumer may help determine whether a violation occurred.

      In some instances, such as possible “prescreening” of applicants by institution personnel, the results of the procedures discussed so far, including interviews with consumers, may be inconclusive in determining whether a violation has occurred. In those cases, examiners should, if authorized by their agency, consult with agency supervisory staff regarding the possible use of “testers” who would pose as apparently similarly situated applicants, differing only as to race or other applicable prohibited basis characteristic, to determine and compare how the institution treats them in the application process.

C. Possible Discriminatory Marketing

1. Obtain full documentation of the nature and extent, together with management’s explanation, of any:
   • Prohibited basis limitations stated in advertisements;
   • Code words in advertisements that convey prohibited limitations; or
   • Advertising patterns or practices that a reasonable person would believe indicate prohibited basis consumers are less desirable or are only eligible for certain products.
2. Obtain full documentation as to the nature and extent, together with management’s explanation, for any situation in which the institution, despite the availability of other options in the market:
   • Advertises only in media serving either minority or non-minority areas of the market;
   • Markets through brokers or other agents that the institution knows, or could reasonably be expected to know, to serve only one racial or ethnic group in the market; or
   • Utilizes mailing or other distribution lists or other marketing techniques for pre-screened or other offerings of residential loan products* that:
   • Explicitly exclude groups of prospective borrowers on a prohibited basis; or
   • Exclude geographies (e.g., census tracts, ZIP codes, etc.) within the institution’s marketing area that have demonstrably higher percentages of minority group residents than does the remainder of the marketing area, but which have income and other credit-related characteristics similar to the geographies that were targeted for marketing; or

   • Offer different products to such geographies, especially if sub-prime products are primarily marketed to racial or ethnic minorities. 

       *NOTE: Pre-screened solicitation of potential applicants on a prohibited basis does not violate ECOA. Such solicitations are, however, covered by the FHAct. Consequently, analyses of this form of potential marketing discrimination should be limited to residential loan products.

3. Evaluate management’s response particularly with regard to the credibility of any nondiscriminatory reasons offered as explanations for any of the foregoing practices. Refer to Evaluating Responses to Evidence of Disparate Treatment elsewhere in this Appendix for guidance.

Using Self-Tests and Self-Evaluations to Streamline the Examination

Institutions may find it advantageous to conduct self-tests or self-evaluations to measure or monitor their compliance with ECOA and Regulation B. A self-test is a program, practice or study that is designed and specifically used to assess the institution’s compliance with fair lending laws that creates data not available or derived from loan, application or other records related to credit transactions (12 CFR 1002.15(b)(1) and 24 CFR 100.140-100.148). For example, using testers to determine whether there is disparate treatment in the pre-application stage of credit shopping may constitute a self-test. The information set forth in 12 CFR 1002.15(b)(2) and 24 CFR 100.142(a) is privileged unless an institution voluntarily discloses the report or results or otherwise forfeits the privilege. A self-evaluation, while generally having the same purpose as a self-test, does not create any new data or factual information, but uses data readily available in loan or application files and other records used in credit transactions and, therefore, does not meet the self-test definition.

Examiners should not request any information privileged under 12 CFR 1002.15(b)(2) and 24 CFR 100.142(a), related to self-tests. If the institution discloses the results of any self-tests, or has performed any self-evaluations, and examiners can confirm the reliability and appropriateness of the self-tests or self-evaluations (or even parts of them), they need not repeat those tasks.

NOTE: When the term self-evaluation is used below, it is meant to include self-tests where the institution has voluntarily disclosed the report or results.

If the institution has performed a self-evaluation of any of the product(s) selected for examination, obtain a copy thereof and proceed through the remaining steps of this section on Streamlining the Examination.

Determine whether the research and analysis of the planned examination would duplicate the institution’s own efforts. If the answers to Questions A and B below are both Yes, each successive Yes answer to Questions C through L indicates that the institution’s work up to that point can serve as a basis for eliminating examination steps.

If the answer to either Question A or B is No, the self-evaluation cannot serve as a basis for eliminating examination steps. However, examiners should still consider the self-evaluation to the degree possible in light of the remaining questions and communicate the findings to the institution so that it can improve its self-evaluation process.

1.  the transactions covered by the self-evaluation occur not longer ago than two years prior to the examination? If the self-evaluation covered more than two years prior to the examination incorporate only results from transactions in the most recent two years.
2. Did it cover the same product, prohibited basis, decision center, and stage of the lending process (for example, underwriting, setting of loan terms) as the planned examination?

3. Did the self-evaluation include comparative file review?

   NOTE: One type of “comparative file review” is statistical modeling to determine whether similar control group and prohibited basis group applicants were treated similarly. If an institution offers self-evaluation results based on a statistical model, consult appropriately within your agency.

4. Were control and prohibited basis groups defined accurately and consistently with ECOA and/or the FHAct?
5. Were the transactions selected for the self-evaluation chosen so as to focus on marginal applicants or, in the alternative, selected randomly?

6. Were the data analyzed (whether abstracted from files or obtained from electronic databases) accurate? Were those data actually relied on by the credit decision makers at the time of the decisions? 

   To answer these two questions and Question G below, for the institution’s control group sample and each of its prohibited basis group samples, request to review 10% (but not more than 50 for each group) of the transactions covered by the self-evaluation. For example, if the institution’s self-evaluation reviewed 250 control group and 75 prohibited basis group transactions, plan to verify the data for 25 control group and seven prohibited basis group transactions.

7. Did the 10% sample reviewed for Question F also show that customer assistance and institution judgment that assisted or enabled applicants to qualify were recorded systematically and accurately and were compared for differences on any prohibited bases?
8. Were prohibited basis group applicants’ qualifications related to the underwriting factor in question compared to corresponding qualifications of control group approvals? Specifically, for self-evaluations of approve/deny decisions, were the denied applicants’ qualifications related to the stated reason for denial compared to the corresponding qualifications for approved applicants?
9. Did the self-evaluation sample cover at least as many transactions at the initial stage of review as examiners would initially have reviewed using the sampling guidance in these procedures?

If the institution’s samples are significantly smaller than those in the sampling guidance but its methodology otherwise is sound, review additional transactions until the numbers of reviewed control group and prohibited basis group transactions equal the minimums for the initial stage of review in the sampling guidance.

10. Did the self-evaluation identify instances in which prohibited basis group applicants were treated less favorably than control group applicants who were no better qualified?
11. Were explanations solicited for such instances from the persons responsible for the decisions?
12. Were the reasons cited by credit decision makers to justify or explain instances of apparent disparate treatment supported by legitimate, persuasive facts or reasoning?

If the questions above are answered “Yes”, incorporate the findings of the self-evaluation (whether supporting compliance or violations) into the examination findings. Indicate that those findings are based on verified data from the institution’s self-evaluation. In addition, consult appropriately within the agency regarding whether or not to conduct corroborative file analyses in addition to those performed by the institution.

If not all of the questions in the section above are answered “Yes”, resume the examination procedures at the point where the institution’s reliable work would not be duplicated. In other words, use the reliable portion of the self-evaluation and correspondingly reduce independent comparative file review by examiners. For example, if the institution conducted a comparative file review that compared applicants’ qualifications without taking account of the reasons they were denied, the examiners could use the qualification data abstracted by the institution (if accurate) but would have to construct independent comparisons structured around the reasons for denial. 

General Instructions

During a fair lending review, examiners evaluate a financial institution’s compliance with the anti- discriminatory provisions of the Equal Credit Opportunity Act (ECOA) and the Federal Housing Act (FHA) in accordance with the Interagency Fair Lending Examination Procedures. Examiners document their evaluation of fair lending risk by completing the Fair Lending Scope and Conclusions Memorandum (FLSC).

The FLSC is divided into five sections and begins with a series of questions and Examiner Summary sections to develop an institution overview and document the assessment of inherent fair lending risks. If more than minimal inherent risk exists, examiners identify specific product(s) to assess applicable discrimination risk factors and whether any factors help mitigate those risks. If residual risk exists and additional analysis is warranted, examiners identify potential focal point(s) and conduct an in- depth analysis. If an in-depth analysis is conducted, examiners document the steps taken to perform the review. Examiners also document the overall conclusions of the fair lending review, including any findings or recommendations, and considerations for the next examination.

Section 1 of the FLSC is where examiners document the institution overview and the assessment of inherent risk for fair lending. If more than minimal inherent risk exists, examiners will then select products for further analysis and document in Section 2 the evaluation of all applicable discrimination risk factors and whether any factors help mitigate discrimination risk. Examiners may determine that residual risk exists and an in-depth analysis is warranted. In such cases, examiners document in Section 3 all potential focal points, as well as the focal point(s) selected for an in-depth analysis. In Section 4, examiners document the steps taken to perform the focal point analysis or that an underwriting or pricing focal point was converted to a Fair Lending Visitation. The conclusions of the fair lending review are documented in Section 5.

Examiners complete various sections of the FLSC based on the level of analysis conducted:

• Section 1 must be completed for all To the extent possible, the majority of Section 1 should be completed during the pre-examination planning process.
• Section 2 is completed if there is more than minimal inherent risk.
• Section 3 is completed if examiners conclude there is residual risk and one or more focal points are selected.
• Section 4 is completed only if a focal point is selected and approved.
• Section 5 must be completed for all examinations.

Section 1: Develop an Institution Overview

Section 1 of the FLSC is where examiners document the institution overview and any inherent fair lending risk. Section 1 contains seven subsections titled: Bank and Examination Information; Structure and Management; Supervisory History; Compliance Management System; Loan Portfolio; Population Demographics and Credit and Market Operations (with five specific areas relating to Underwriting, Pricing, Steering, Marketing, and Redlining).

The subsections in Section 1 contain questions that examiners answer when assessing inherent risk. The questions do not cover every potential inherent fair lending risk, but rather set out a basic framework that could be supplemented with additional information identified by examiners based on the overall risk profile of the bank. Further, a certain number of “yes” or “no” responses to the questions in Section 1 does not determine the need for a specific level of review. Instead, the questions are meant to ensure that examiners document various risks considered during the fair lending review. Examiners provide supporting detail regarding their evaluation of inherent risk for each subsection within the Examiner Summary sections in Section 1.

Section 1 will include a description of inherent fair lending risk identified at the bank, but examiners will not describe any mitigating factors for potential discrimination risk factors, or the results of any product-specific analysis in Section 1. The analysis of any applicable discrimination risk factors, mitigating factors, and results from analyses conducted using fair lending tools are documented in Section 2 of the FLSC.

The following fields represent the information collected by the examiner in Section 1 of the FLSC:
Bank and Examination Information

The Bank and Examination Information subsection includes general bank information.

Structure and Management

The Structure and Management subsection summarizes pertinent details about the bank’s structure, management, organizational hierarchy, business strategy, and markets, and any changes since the previous examination.

Supervisory History

The Supervisory History subsection will summarize the bank’s recent supervisory history, including details about any investigations or litigation relating to discrimination, and any fair lending-related complaints.

Compliance Management System

The Compliance Management System subsection will include a description of the bank’s compliance management system (CMS) as it relates to fair lending (e.g., Board and management oversight, policies and procedures, training, monitoring or audits, and consumer complaint response) and note any changes since the previous examination.

NOTE: Examiners document in Section 1 a description of the bank’s CMS as it relates to fair lending. For example, examiners may describe how the bank’s compliance officer reviews all underwriting exceptions on a quarterly basis. Otherwise, examiners should not document in Section 1 any assessment of the bank’s CMS. For example, examiners would not describe how the compliance officer’s review of underwriting exceptions helps mitigate risk. If more than minimal inherent risk exists, examiners will then document in Section 2 all applicable discrimination risk factors, including an assessment of the effectiveness of the bank’s CMS in mitigating those discrimination risks.