CITIZENS NATIONAL BANK
From: Janet Dukes [mailto:JANET@cnbohio.com]
Sent: Thursday, April 15, 2004 10:56 AM
To: regs.comments@federalreserve.gov; Comments; regs.comments@occ.treas.gov;
regs.comments@ots.treas.gov
Subject: EGRPRA
Re: EGRPRA Review of Consumer Protection Lending Related Rules
Dear Sir or Madam:
As the VP/COO and Compliance Officer of a community bank (Citizens
National Bank-$350M), I greatly welcome the regulators' effort on
the critical problem of regulatory burden. Community bankers work
hard to establish the trust and confidence with our customers that
are fundamental to customer service, but consumer protection rules
frequently interfere with our ability to serve our customers.
Truth in Lending (Federal Reserve Regulation Z)
Right of Rescission. One of the most burdensome requirements is the three-day
right of rescission under Regulation Z. Rarely, if ever, does a consumer
exercise the right. Consumers resent having to wait three additional days
to receive loan proceeds after the loan is closed, and they often blame the
bank for "withholding" their funds. Even though this is a statutory
requirement, inflexibility in the regulation making it difficult to waive
the right of rescission aggravates the problem. If not outright repealed,
depository institutions should at least be given much greater latitude to
allow customers to waive the right.
Finance Charges. Another problem under Regulation Z is the definition
of the finance charge. Assessing what must be included in - or excluded
from - the finance charge is not easily determined, especially fees
and charges levied by third parties. And yet, the calculation of
the finance charge is critical in properly calculating the annual
percentage rate (APR). This process desperately needs simplification
so that all consumers can understand the APR and bankers can easily
calculate it.
Equal Credit Opportunity Act (Federal Reserve Regulation B)
Section 202.7(d)(3)- Evidence of Joint Application. These requirements make
it difficult and almost require all parties - and their spouses - come into
the bank personally to complete documents. This makes little sense as the
world moves toward new technologies that do not require physical presence
to apply for a loan.
Home Mortgage Disclosure Act (HMDA) (Federal Reserve Regulation
C)
The volume of the data that must be collected and reported is clearly
burdensome. Certain data collection requirements are difficult to
apply in practice and therefore add to regulatory burden and the
potential for error, e.g., assessing loans against HOEPA (the Home
Owners Equity Protection Act) and reporting rate spreads; determining
the date the interest rate on a loan was set; determining physical
property address or census tract information in rural areas, etc.
Flood Insurance
The current flood insurance regulations create difficulties with customers,
who often do not understand why flood insurance is required and that the
federal government - not the bank - imposes the requirement. The government
needs to do a better job of educating consumers to the reasons and requirements
of flood hazard insurance. Flood insurance requirements should be streamlined
and simplified to be understandable.
Conclusion
The volume of regulatory requirements facing the banking industry today presents
a daunting task for any institution, but severely saps the resources of community
banks. Thank you for the opportunity to comment on this critical issue.
Janet A. Dukes
VP/COO and Compliance Officer
Citizens National Bank of Bluffton
131 Citizens Parkway
Bluffton, OH 45817
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