Term
| Department of Justice Referalls |
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Definition
| Whenver the agency has reason to believe that one or more creditor has enaged in a pattern or practice of discouraging or denying applications for credit |
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Term
|
Definition
Agency has reason to believe:
a) a violation of ECOA occured, and
b) has reason to believe that the alleged violation would also be a violation of the FHA, and
c) does not refer to the matter to DOJ
* Notify the applicant that HUD was notified and that there was potential dicrimination |
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Term
| Violation: ECOA only, pattern or practice of discouraging or denying applications |
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Definition
Report to:
DOJ: Mandatory
HUD: None |
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Term
| Violation: ECOA only, pattern or practice (but not discouraging or denying applications) |
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Definition
Report to:
DOJ: Discretionary
HUD: None |
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Term
|
Definition
Report to:
DOJ: Discretionary
HUD: None |
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Term
| FHA, only, pattern or practice |
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Definition
Report to:
DOJ: Discretionary
HUD: None |
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Term
|
Definition
Report to:
DOJ: None
HUD: None |
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Term
| ECOA and FHA, pattern or practice (but not discouraging or denying appliations) |
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Definition
Report to:
DOJ: Discretionary
HUD: Mandatory, if not referred to DOJ |
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Term
| ECOA and FHA, pattern or practice of discouraging or denying applications |
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Definition
Report to:
DOJ: Mandatory
HUD: Discretionary |
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Term
|
Definition
Report to:
DOJ: Discretionary
HUD: Mandatory, if not referred to DOJ |
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Term
| Wholesale/ Limited Purposs Banks Community Development Test |
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Definition
-Community Development Lending
-Qualified Investments
-Community Development Services |
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Term
|
Definition
| Bank is not in the business of extending home mortgage, small business, small farm, or consumer loans to retail customers, and for which a designation as a wholesale bank is in effect |
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Term
|
Definition
| Offersa narrow product line, such as credit cards, or motor vehicle loans, to a regional or broader market and for which a designation as limited purpose is in effect |
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Term
| Designation as a Wholesale or Limiited Purpose Bank |
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Definition
| A bank shall file a request, in writing, with FDIC, at least 3 months prior to proposed effective date of the designation. Of FDIC approves designation, it remains in effect until bank requests revocation of designation or until 1 year after FDIC notifies bank that FDIC revoked the designation |
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Term
| Primary Purpose of Community Development |
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Definition
1) If a majority of dollars or beneficiaries are identifiable to one or more of the enumerated community development purposes
2) If the express bona fide intent of the activity as stated, in a prospectus, loan proposal, or community action plan is primarily one or more of the community development purposes, the activity is specifically structured to achieve expressed CD purpose, and activity accomplishes, or reasonably certain to accomplish CD purpose |
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Term
|
Definition
| Determined based on percentage of units set-aside for affordable housing for low or moderate-income individuals |
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Term
| Special Service Institutions |
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Definition
| Typically serve as correspondent banks, turst companies, or clearing agents who engage only in specialized servies, such as cash management controlled disbursment services |
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Term
|
Definition
| Includes any company that controls, is controlled by, or is under control with another company |
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Term
| Community Development Activities |
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Definition
- Community or tribal based child care
- Educationaly, health, or social services targeted to low- or moderate- income individuals
-Affordable housing for low- or moderate-income individuals
- Social services targeted to low- or moderate-income individuals
-Activities that revitalize or stabalize low- or moderate-income individuals low income areas, designated disaster areas, or underserved or distressed non- metropolitan middle income geographies |
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Term
| Examples of MWLIs CRA Consideration Activities |
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Definition
-Making a deposit or capital investment
-Purchasing a participation in a loan
-Loaning an officer or providing other technicaly expertise to assist an MWLI in improving its lending policies and practices
- Providing financial support to enable MWLI to partner with schools or universities to offer financial literacy education to members of its local community
-Providing free or discounted data processing systems or office facilities to aid an MWLI serving its customers |
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Term
|
Definition
-Support permanent job creation, retention, and/or improvement either in low- or moderate-income geographies or in areas targeted for redevelopment by federal, state, local, or tribal governments
-All SBDC, SBIC, Rural Business Investment Company, New Markets Venture, Capital Company/ Tax Credit Eligible CD Entity will get credit |
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Term
|
Definition
-Major disaster area designated by the federal government
-Include major disaster declarations administered by FEMA
-Excludes debris removal (a) & emergency protective measures (b)
-Consider revitalizing and stabilizing activities for 36 months following date of designation |
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Term
| Distressed or Underserved Non-metropolitan, middle- income geographies |
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Definition
1) an unemployment rate of at least 1.5 times the national average
2) a poverty rate of 20 percent or more, or
3) a population loss of 10 percent or more between the previous and most recent decennial census or a net migration loss of five percent or more over the five year preceding the most recent census |
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Term
|
Definition
Targeted at LMI, disaster areas, non-metropolitan middle income:
-Community Service
-Revitalization and Stabilization
-Affordable Housing
-Neighborhood Stablilization Project
-Economic Development |
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Term
|
Definition
| Limited lending activities to a product line other than a traditional retail product line required to be evaluated under the lending test |
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Term
| Investment Performance Criteria |
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Definition
1) Dollar amoung qualified investments
2) Innovativeness or complexity of qualified investments
3) Responsiveness of qualified investments to credit and community development needs; and
4) the degree to which the qualified investments are not routinely by private investors |
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Term
| Composite Rating Point Requirements |
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Definition
Rating Total Points
Outstanding 20 or over
Satisfactory 11 through 19
Needs to Improve 5 through 10
Substantial Non Compliance 0 through 4 |
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Term
| CRA Sections Point Assignments |
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Definition
L S I
Outstanding 12 6 6
High Satisfactory 9 4 4
Low Satisfactory 6 3 3
Needs to Improve 3 1 1
Substantial Non-Compliance 0 0 0 |
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Term
|
Definition
-Race or Color
-Religion
-National Origin
-Sex
-Marital Status
-Age
-Applicant's receipt of income derived from public assistance
-Applicant's exercise of any right under the Consumer Credit Protection Act |
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Term
|
Definition
-Race or Color
-National Origin
-Religion
-Sex
-Familial Status/ Children
-Handicap |
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Term
|
Definition
| When a lender openly discriminates on a prohibited basis |
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Term
|
Definition
| Neutral policy disproportionately excludes/ burdens certain persons or protected class |
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Term
| Types of Lending Discrimination |
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Definition
-Overt Evidence of Disparate Treatment
-Comparative Evidence of Disparate Treatment
-Evidence of Disparate Impact |
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Term
| Comparative Evidence of Disparate Treatment |
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Definition
| When a lender treats a credit applicant differently based on one of the prohibited bases |
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Term
|
Definition
- Cash deposits (if made in person)
- Electronic payments (after payment is received)
- Checks drawn on U.S. treasury, U.S. postal service money orders(in person), FRB & FHLB checks (in person), some state or local government checks (in person, can require deposit slip), cashier, teller, and certified checks (in personm can require deposit slip)
- $200 if otherwise not subject to next day availability
- Checks deposited in branch of the same bank in the same state |
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Term
|
Definition
| Electronic transfer of finds requested by a sender to a recipient recieving the funds in a foreign country sent by a person that provides remittance transers in the ordinary course of business. Does not include transfers of $15 or less or commodities or security transfers |
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Term
|
Definition
- Transfer of funds that instructs a financial institution to debit or credit an account (not by check, draft, or paper instrument)
-Generally must be initiated through an electronic terminal, computer, or magnetic tape
-Account accessed must be a consumers asset account, established primarily for personal, family, or household purposes
- Can be payroll account established by employer for consumer
-P.O.S, ATM, telephone transfers, direct deposits, withdrawal of funds, including merchant transactions, if a customer account debited, bill payment service, one time using check as information source |
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Term
|
Definition
Any person who has an ownership interest in the dwelling being given as collateral and uses it as his or her principal dwelling has the right to rescind the transaction within 3 business days after:
a) the establishment of credit plan/ increase
b) delivery of truth in lending disclosures
c0 delivery of notice of right to rescind |
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Term
| TILA Triggering Terms and Disclosures |
|
Definition
Terms: Amount or percentage of down payment, number of payments, or period of repayment, amount of payments, or amount of finance charges
Disclosures: Amount of percentage of down payment, terms of repayment, which reflect repayment obligatoins, including balloon payment if applicable, APR, and if the APR may be increased after consummation |
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Term
|
Definition
| When the bank expressly agrees in writing with a subsequent consumer as the primary obligor |
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Term
|
Definition
- Date disclosures are delivered
- The date of consummation 'closing date'
- Date the amounts due and from the consumer and seller are expected to be paid
- Name of settlement agent
- Address/ location of the property
- With seller: the sale price
- With no seller: appraised value |
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Term
| Negative Amortization Loan Payment Disclosures |
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Definition
- Minimum periodic payment required until first payment or interest rate increase
- Minimum periodic payment that would be due at first payment increase, and second
- Statement that minimum pays only some interest, does not repay only principal and will cause loan amount to increase
- Fully amortizing period payment amount amount at earliest time to be made
- Amount of fully amortizing periodic payment labeled as full payment option, pau all principal unaccrrued interest |
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Term
| Interest- Only Loans Payment Disclosures |
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Definition
-If payment will be applied to interest, label as "interest payment" and statement that none is being applied to principal
-If payment will be applied to accrued interest and principal, the earliest date payment will be required and itemization of amount applied to accrued interest, "interest payment", and amount applied to principal "principal payment" any escrowed amount required
-Total estimated monthly payments |
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Term
| Fully Amortizing Loans Payment Disclosures |
|
Definition
All periodic will be applied to accrued interest and principal
For each interest rate
- Corresponding periodic principal and interest payment
- If payment may increase the payment that corresponds to first increase and earliest date it can occur
- If escrow is required and estimate of taxes and insurance for each payment
- Total of payments |
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Term
| Interest Rate Disclosures |
|
Definition
-Fixed rate amortizing: Interest rate on date of consummation
-Amortizing ARM: Introductory rate and monthly payment, maximum during the first five years, and maximum ever
- Date increased will become effective and interest rate that applies, as applicable
- Negative amortization: interest rate at consummation and if it can adjust, maximum interest rate, if minimum payment can increase
-Introductory rate disclosures for amortizing ARM loans when interest rate at consummation is less than fully indexed rate, use model form, disclosure at consummation, rate will increase at first adjustment, fully index rate |
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Term
| Payment Schedule Disclosure |
|
Definition
-Must contain in the number amount, and timing of payments scheduled to reply the obligation
-Must use exact amount of payment
-If PMI payments are included, must reflect those payments until date on which creditor must automatically terminate PMI |
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Term
|
Definition
The amount you will have paid when you have made all scheduled payments
- Total of payments is the sum of a finance charge and the amount financed |
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|
Term
|
Definition
The mount of credit provided to you or on you behalf
Computed by:
a) determine principal loan amount
b) add other amounts financed by creditor that are not finance charges
c) subtract prepaid finance charges |
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Term
|
Definition
| Application fee, late charges, overdraft fees, annual periodic fees, seller points, required taxes and fees, insurance premiums in lieu of perfecting security interest, non-required closing agent charges, voluntary debt cancellation files, discounts offered to induce payment for purchase by a=cash check or other means, real estate related fees (on residential mortgage), title examination, abstract of title, title insurance, property survey, loan related document fees (deeds, mortgages), notary/ credit report fees, property appraisal fees, amount required to be paid in escrow, interest forfeited as a result of interest reduction |
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|
Term
|
Definition
The dollar amount the credit will cost you:
-Interest, service, transaction, activity charges or fees
-Points, loan fees, assumption fees, finders fee, and similar charges
-Appraisal, investigation, and credit report fees (for non-residential loans)
-Premiums for credit life, accident, health, loss of income, or insurance protecting creditor against default, unless not required by creditor
-Premiums for insurance against loss of property
-Mortgage broker fees
-Closing agent charges (if required by borrower)
-Charges imposed on creditor by third party for purchasing the obligation if charge paid consumer
-Discounts for purpose of inducing payment other than use of credit
-Debt cancellation/ suspension charges |
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Term
| Overdraft Best Practices (Program Features) |
|
Definition
1. Allow customers to opt out and give notice of this fact
2.Give customers notice that transaction will trigger overdraft fee
3. Distinguish between actual balance and overdraft protection
4. Notify each overdraft when used (sent same day)
5. Impose daily cap on cumulative fee
6. Monitor overdraft protection and inform customers of available customers
7. Don't send negative reports on consumers who use overdraft protection program that has been promoted by institution |
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Term
| Overdraft Best Marketing Practices |
|
Definition
1. Don't promote poor account management by encouraging overdrafts
2. Fairly represent the program. inform about alternatives
3. Train staff to explain program and opt-out rights
4. Explain to customers that program is discretionary
5. Distinguish overdraft from 'free' accounts
6. Disclose cost of overdraft program, use actual dollar amount
7. Make clear that overdraft fee counts towards overdraft limit
8. Explain to consumer of multiple items returned with multiple fees
9. Explain to consumer order of transactions
10. Give illustration of types of transaction is which overdraft may apply |
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Term
|
Definition
Within 30 days of end of escrow account computation year
- Amount of mortgage payment and amount going into escrow
- Last years payment/ portion that went into escrow
- Amount paid into escrow account
- Balance of account at end of period
- Explanation of account at end of period
- Explanation of how surplus is handled
- Explanation of how shortage is paid to borrower
- Reasons why low monthly balance wasn't reached |
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Term
|
Definition
- Effective date of transfer of servicing
- Name, address and toll free or collect telephone number of the transferee
- Name, address, and toll free or collect number of employee of transferor servicer
- Date on which transferor service will cease to accept payments. transferee will begin to accept
- Info concerning any effect the transfer will have on terms
- Statement that transfer or servicing does not affect any other term |
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|
Term
|
Definition
- Consumer current or reasonably expected income or assets
- Consumers current employment status, if applicable
- Consumers monthly payment on loan
- Consumers monthly payment on why simultaneous loan that creditor knows will be made
- Consumer current debt obligations, alimony, and child support
- Consumers monthly payment for mortgage related obligations
- Consumers debt to income ratio or residual income consumers credit history |
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Term
|
Definition
1) Denial of consumer credit insurance
2) Refusal to open a checking account
3) An adverse change in terms of consumer credit or insurances such as refusing to renew policy or line of credit
4) The denial of employment |
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Term
|
Definition
-The score representing the point at which 40% of the lenders borrowers have higher scores and 60% have lower scores
- Recalculate every two years |
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Term
|
Definition
| Calculate cutoff score by considering credit scores of all or representative sample of credit scores of customers it has provided credit for specific types of credit products |
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Term
| Secondary Source Approach |
|
Definition
| -New to risk based pricing may determine cutoff based on information from market research or information from market research or information derived from relevant third party sources |
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Term
|
Definition
- Borrowers loan is secured by principal residence
- Not assisted by Farmers Home administration
- Unable to make payments due to reduction of income due to involuntary loss of job or similar reduction experienced by a person who contributes to homeowners income |
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Term
|
Definition
- Notify homeowner of ability of help
- Provide HUD approved toll free number
- Sent out no later than 45 days from delinquency |
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|
Term
|
Definition
| The pricing or availability of credit to the purchase of non traditional bank products |
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Term
|
Definition
| Misrepresenting the fact that certain insurance products and annuities carry a risk for financial loss |
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Term
|
Definition
| May not discriminate against victims of domestic violence |
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|
Term
| Insurance and Annuity Advertising Disclosures |
|
Definition
- Are not deposits covered by federal deposit insurance
- Are not guaranteed by the bank
- Involve risk and may lose value |
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Term
|
Definition
- Interest
- Transaction Fees
- Loan Origination Fees/ Consumer Points
- Credit Guarantee/ Insurance Premiums
- Charges imposed on the creditor for purchasing the loan, which are passed on to the consumer
- Discounts for inducing payment by means other than credit
- Mortgage broker fees
- Other examples: fee for preparing TILA disclosures, real estate construction loan inspection fees, fees for post consummation tax or flood service policy, required credit life insurance charges |
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Term
|
Definition
| Risk arising from adverse business decisions, or failure to implement appropriate business decisions in a manner that is consistent with the institutions strategic goals |
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Term
|
Definition
| The risk arising from negative public opinion |
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Term
|
Definition
| The risk of loss resulting from inadequate or failed internal processes, people, and systems from external eventa. |
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Term
|
Definition
| The risk arising from problems with service or product delivery |
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Term
|
Definition
| The risk that a third party, or any other creditor necessary to the third-party relationship, is unable to meet the term of the contractual arrangements with the financial institution or to otherwise financially perdorm as agreed. |
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Term
|
Definition
| The risk arising from violations of laws, rules, or regulations, or from non-compliance with internal policies or procedures or with the institution's business standards. |
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Term
| Elements of Third Party Risk Management |
|
Definition
1) Risk Assessment
2) Due diligence in selecting a third party
3) Contract structuring and review
4) Oversight |
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Term
| Advantages of a Compliance Management System |
|
Definition
How an institution:
- Learns about its compliance responsibilities
- Ensures that employees understand these responsibilities
- Ensures that requirements ae incorporated into business processes
Reviews operations to ensure responsiblities are carried out and requirements are met
- Takes correction action and updates materials as necessary |
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Term
| Board and Senior Management CMS Responsbilities |
|
Definition
- Demonstrating clear and unequivocal expectations about compliance, not only within the instiution, 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;
- Conducting periodic compliance audits; and
- providing for recurrent reports by the compliance officer to the Board |
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Term
| Compliance Officer Authority |
|
Definition
- Cross departmental lines
- Have access to all areas of the institution's operations
- Effect corrective action |
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Term
| Compliance Officer Responsibilities * |
|
Definition
- 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 political liabilities
- Coordinating responses to consumer complaints
- Reporting compliance activities and audit/review findings to the Board; and
- Ensuring correction action |
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Term
| Effective Compliance Third Party Oversight Activities |
|
Definition
- Risk assessment
- Due diligence
- Appropriate contract structuring and review
-Sufficient oversight
-Adequate quality control |
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Term
| Factors for formality of compliance program |
|
Definition
- Institution’s size, number of branches, and organizational structure
- Business strategy of the institution
- Type of products
- Type and extent of third party relationships
- Location of the institution
- Other influences, such as whether the institution is involved in interstate banking |
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Term
| Effective Monitoring Program |
|
Definition
- Disclosures and calculations for various product offerings;
- Document and filing retention procedures;
- Posted notices, marking literature, and advertising;
- Various state usury and consumer protection laws and regulations
- Third party service provider operations; and
- Internal compliance communication systems that provide updates and revisions of the applicable laws and regulations to management and staff |
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Term
| Factors for the Scope and Frequency of Audits |
|
Definition
- Experience of employees
- Organization/ staffing of compliance function
- Volume of transactions
- Complexity of products
- Number and type of complaints received
- Number and type of branches
- Acquisition or opening of additional branches
- Size of the institution
- Organizational structure
- Outsourcing to third parties (review of contracts)
- Written policies and procedures
- Any changes to the above |
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Term
| Audit Reports Should Include... |
|
Definition
- Scope of audit
- Deficiencies or modifications identified
- Number of transactions sampled by category of product type
-Descriptions/ Suggestions of corrective actions and time frames |
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Term
|
Definition
- Current and past enforcement actions
- Reimbursement history
- History of compliance with fair lending laws
- Current and prior regulation ratings
- Audit findings |
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Term
|
Definition
- Applicable regulations
- New regulations
- Changes to regulations
- Recent case law |
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Term
|
Definition
- Major product line
- New products/ services Growth in operations
- Complexity of operations
- Third-party affiliations |
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|
Term
|
Definition
| Effectively manages compliance risks, board and management actively participate in managing the CMS, the CMS is considered strong, and good examination history, limited review of transactions |
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Term
|
Definition
| Generally effective, but has specific weaknesses, some testing should be planned |
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Term
|
Definition
| Ineffective in identifying, monitoring or managing compliance risk, significant risk is apparent, will require more extensive transactional testing |
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Term
| Entrance Meeting Discussion Topics |
|
Definition
- Overview of exam process
- Names of FDIC examiners
- Anticipated length of the examination
- EIC’s accessibility
- Examiner roles
- Identify primary contact person for reviews
-Discuss issues identified offsite |
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Term
| Board Meeting Required When... |
|
Definition
- There are significant problems requiring consultation
- Informal or formal enforcement action
- 3, 4, or 5 rating
- Needs to Improve or substantial non-compliance CRA rating
- Bank requested a meeting |
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Term
|
Definition
| • Required for newly chartered bank, bank involved in recent or proposed merger, recently converted to state non-member status |
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|
Term
| A Visitation May Become Full Examination If... |
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Definition
| • Can become full examination if significant CRA or CMS deficiencies are noted, significant non-compliance in previously criticized areas, or significant non-compliance with an informal or formal enforcement action |
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Term
| Types of Informal Actions |
|
Definition
- Board Resolutions
- Memorandum of Understanding |
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Term
|
Definition
| Informal commitments by BOD, which direct corrective action, the FDIC is not party to the resolution but approves and accepts the resolution |
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|
Term
| Memorandum of Understanding |
|
Definition
| o Memorandum of Understanding- Informal agreement drafted by the RO for corrective action and to address weaknesses, more severe than a formal resolution |
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|
Term
| Types of Formal Enforcement Actions |
|
Definition
- Termination of Insurance
- Cease and Desist Order
- Temporary Cease and Desist Order
- Removal and Prohibition Order
- Temporary Suspension Order
- Suspension Order
- Civil Money Penalties |
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|
Term
| Cease and Desist Order (Temporary) |
|
Definition
Halts violations of laws and requires affirmative action to correct conditions resulting from violation
(Used in severe situations to halt practices pending a formal hearing) |
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|
Term
| Removal and Prohibition Order |
|
Definition
| The FDIC has authority to remove IAP for specific activities or industry wide |
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|
Term
| Suspension Order (Temporary) |
|
Definition
Issued to IAPS who are changed felonies involving dishonesty or a breach of trust pending the disposition of the criminal charges
(May order removal of IAP pending hearing, if the person poses an immediate threat) |
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|
Term
| Primary Purposes of Regulation Z |
|
Definition
- Protects consumer against inaccurate and unfair credit billing and credit card pratices
- Provides rescission rights
- Provides rate caps on certain dwelling secured loans
- Imposes limitations on HELOCS and certain closed end mortgages
- Provides minimum standards for most dwelling secured loans
- Delineates and prohibits unfair and deceptive mortgage lending practices |
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|
Term
|
Definition
- Business, commercial or agricultural credit
- Credit extend to other than natural person
- Credit in excess of annually adjusted threshold not secured by real property or personal property used as principal dwelling
- Public utility transactions
- Credit extended by SEC or CFTC broker-dealer involving securities or commodities accounts
- Home fuel budget plans not subject to a finance charge
- Certain student loan programs |
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|
Term
| Closed-End Non Mortgage Loan Finance Charge Tolerance |
|
Definition
- $5 if amount financed is less than or equal to $1,000
- $10 if amount financed exceeds $1,000 |
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|
Term
| • Closed-End Secure by Real Property/ Dwelling Finance Charge Tolerance |
|
Definition
- Accurate if not understated by more than $100
- Overstatement are not violations |
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|
Term
| Finance Charge Tolerance for Rescindable Transactions |
|
Definition
- Cannot vary by more than ½ of 1% of credit extended or $100, whichever is greater
- For refinancing at a new institution the tolerance is 1% of the transaction
- If in foreclosure the tolerances is only $35 and consumer may rescind of a mortgage broker fee that should have been included in the finance charge was not |
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|
Term
| TILA Significant Charges Requiring 45 Days' Notice |
|
Definition
- Penalty fees
- Transaction Feees
- Fees imposed for issuance of availability of the open-end plan
- Grace period
- Balance computation method |
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|
Term
| TILA Changes That Do Not Require Advanced Notice |
|
Definition
- Reductions of finance charges
- Termination of account privileges resulting from an agreement involving a court proceeding
- The change is an increase in an APR upon expiration of a specified period of time previously disclosed in writing
- The change applies to increase in variables APRs that change according to an index no under the card issuer’s control
- Rate increases due to the completion of, or failure of a consumer to comply with, the terms of a workout or temporary hardship arrangement, if those terms are disclosed prior to commencement of the arrangement |
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|
Term
|
Definition
| Finance charge is based on the balance outstanding at the start of the billing cycle |
|
|
Term
|
Definition
| A daily periodic rate is applied to either the balance on each day in the cycle or the sum of the balances on each of the days in the cycle |
|
|
Term
| Average Daily Balance Method |
|
Definition
| Sum of daily balances divided by number of days in the billing cycle multiplied by the periodic rate |
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