We are sharing some common themes and reminders from the most recent quarterly meeting of the Bankers Compliance Task Force supported by Jones Walker LLP, which includes findings in deposit and loan compliance reviews and recent exam issues shared by member banks.
One item was related to denied applications, on which we issued several reminders. The first reminder was that banks should periodically review nonoriginated consumer loan applications to determine whether the application contains sufficient information to make a fair evaluation of the request. Often, declined applications contain less information than those applications that result in an origination. This could be problematic when defending a fair lending violation or a complaint; therefore, lenders should be trained on the importance of fully completing an application on denied requests. The second reminder was that the reasons listed for declining an application should be fully supported by documentation of the information or data used to make the credit decision. The third reminder was that if the bank denies a request in connection with a first lien dwelling secured loan, the appraisal disclosure must be provided within three days of application unless the Loan Estimate is provided. The final reminder was that banks should also ensure that the factor "Inquiries Impacted the Score" is disclosed on the adverse action form, along with the other credit score factors, if it is listed as a factor on the credit report.
Banks were also reminded to provide an Affiliated Business Arrangement disclosure prior to making any referrals if any board member provides settlement services, such as title services or insurance. Also, if anyone in the bank has as little as a 1% ownership interest in a settlement service provider and is in a position to make referrals, the Affiliated Business Arrangement disclosure may be required. Banks should review these relationships and determine if the disclosure is necessary.
Several reminders related to flood insurance were also shared, as this always seems to be a closely examined area. The group was reminded that banks are responsible for timely flood notices even when a third party sends the notices on behalf of the bank. The notice process and the notices should be reviewed periodically to determine that they are provided timely. Additionally, when map changes occur, the bank should send the required notices by registered mail or electronic mail to demonstrate delivery. Banks were also reminded to check the replacement cost value when a flood policy is renewed. It is important to remember that the minimum amount of flood insurance should be the lesser of 1) the outstanding balance of the loan, 2) the full replacement cost value, and 3) the maximum coverage available through the National Flood Insurance Program (NFIP). Finally, before accepting any mutual aid society policies, the bank must get approval from its regulator.
On the deposit side, the group was reminded that Regulation CC thresholds are increasing July 1, 2025. Banks should ensure that their vendors will update the relevant systems by July 1. Any customer documents that the bank may use internally, such as hold notices, should also be updated. If the bank has Regulation CC disclosures on its website, then it must be updated prior to July 1, 2025. The Regulation CC Funds Availability posters should also be updated with the new threshold amounts.
As a final note from the meeting, banks are encouraged to review internal processes and procedures to ensure alignment with the reminders discussed. From properly documenting denied applications and issuing timely disclosures to monitoring flood insurance requirements and preparing for Regulation CC threshold changes, these items remain key focus areas for examiners. Continued attention to these details will help banks stay compliant and avoid potential findings in future reviews.
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