Compliance Question of the Week

In today’s banking environment as soon as one big new regulation is implemented another pops up. Our compliance resources help your community bank stay one step ahead of the regulators.

Regulations and Guidance

Compliance Question of the Week

QUESTION: Is the director of an affiliate bound by the extension of credit requirements of Regulation O?


Regulation O states: Extensions of credit to a director of an affiliate of a bank are not subject to sections 215.4 “General Prohibitions”, 215.6 “Prohibitions on knowingly receiving unauthorized extensions of credit”, and 215.8 “Records of member banks” if—  (i) The director of the affiliate is excluded, by resolution of the board of directors or by the bylaws of the bank, from participation in major policymaking functions of the bank, and the director does not actually participate in such functions.

Reference: Regulation O: 12 CFR 215.2(d)(2)


Q&A Archives



Per the CFPB, If the closing disclosure has already been provided to the consumer, the creditor must use a corrected closing disclosure to reset tolerances. 

Per the CFPB: If the creditor provides a corrected disclosure, it may also be required to provide the consumer with an additional three-business day waiting period prior to consummation.  The three-business day waiting period requirement applies to a corrected Closing Disclosure that is provided when:

  • The loan’s disclosed APR becomes inaccurate;
  • There are changes to the loan product; or
  • A prepayment penalty is added to the loan

Reference: CFPB Small Entity Compliance Guide: TILA-RESPA Integrated Disclosure Rule, v5.2, page 72. Regulation Z: 12 CFR 1026.19(f)(2) and (f)(2)(i) and (ii); 1026.19(e)(4)





No. A covered loan secured by five or more separate dwellings in more than one location is not a loan secured by a multifamily dwelling. Nor is a covered loan secured by five or more separate dwellings that are located inside of a multifamily dwelling considered a multifamily dwelling for reporting purposes. Note: This data field is required for all HMDA reporting institutions.

Reference: Commentary 1003.2(n) -3.





Understanding the nature and purpose of a customer relationship in order to develop a customer risk profile is an important part of ongoing customer due diligence, and is required for all customers and accounts. An understanding based on category of customer means that for certain lower-risk customers, a financial institution’s understanding of the nature and purpose of a customer relationship can be developed by inherent or self-evident information, such as the type of customer or type of account, service, or product or other basic information about the customer including information obtained at account opening.

The profile may, but need not, include a system of risk ratings or categories of customers. Accordingly, the documentation that is required to demonstrate an understanding of the nature and purpose of a customer relationship would vary with the type of customer, account, service, or product.

Reference: FinCEN CDD FAQ #35




 Except for multifamily affordable housing loans, which may be reported by retail institutions both under HMDA as home mortgage loans and as community development loans, in order to avoid double counting, retail institutions must report loans that meet the definition of “home mortgage loan,” “small business loan,” or “small farm loan” only in those respective categories even if they also meet the definition of “community development loan.”

As a practical matter, this is not a disadvantage for institutions evaluated under the lending, investment, and service tests because any affordable housing mortgage, small business, small farm, or consumer loan that would otherwise meet the definition of “community development loan” will be considered elsewhere in the lending test. Any of these types of loans that occur outside the institution’s assessment area(s) can receive consideration under the borrower characteristic criteria of the lending test. 

Reference: Interagency CRA Q&As July 2016




While a bank is permitted to group fees if they are the same type, the description must make it clear that the dollar figure represents more than a single fee. However, a transfer fee in which different dollar amounts are imposed, e.g., $.50 for deposits and $1.00 for withdrawals may not be grouped together.

Other examples include:

  • Monthly maintenance and excess-activity fees;
  • Fees for electronic fund transfers and fees for other services, such as balance-inquiry or maintenance fees.
  • Fees for paying overdrafts and fees for returning checks or other items unpaid.

Reference: Official Staff Interpretation 1030.6(a)(3) Itemizing fees by type.




To be unfair, the act or practice must be injurious in its net effects — that is, the injury must not be outweighed by any offsetting consumer or competitive benefits that are also produced by the act or practice. Offsetting consumer or competitive benefits may include lower prices or a wider availability of products and services. Nonetheless, both consumers and competition benefit from preventing unfair acts or practices because prices are likely to better reflect actual transaction costs, and merchants who do not rely on unfair acts or practices are no longer required to compete with those who do. Unfair acts or practices injure both consumers and competitors because consumers who would otherwise have selected a competitor’s product are wrongly diverted by the unfair act or practice.  Costs that would be incurred for remedies or measures to prevent the injury are also taken into account in determining whether an act or practice is unfair. These costs may include the costs to the institution in taking preventive measures and the costs to society as a whole of any increased burden and similar matters. 

Reference: CFPB Exam Manual V. 2, October 2012




Regulation E change in terms timing requires change in terms to be mailed at least calendar 21 days before the change, and Regulation DD requires the change in terms to be mailed at least calendar 30 days before the change. In order to meet the requirements for notification of a change in terms, the change in terms may be sent under the Regulation E timing requirements and will be considered in compliance for Regulation DD.


Reference: Regulation DD: 12 CFR 1030.3(c)


In general, unless the consumer has given express permission, a debt collector is not permitted to provide any information to a third party. “…a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.” A consumer includes the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.

Reference: FTC: 15 USC 1692c Fair Debt Collection Practices Act section 805.

Ask an Expert

We want to hear your pressing questions about compliance at your bank. Please fill in the form below. Not all questions will be featured. Your questions will be kept anonymous.