Compliance Question of the Week

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Regulations and Guidance

Compliance Question of the Week

Question: Do the Reg B requirements to provide an appraisal apply for withdrawn, denied or incomplete applications?


The requirements to provide an applicant with a copy of all appraisals and other written valuations do apply whether credit is extended or denied or if the application is incomplete or withdrawn.

The Official Staff Interpretation adds: Even if the transaction will not be consummated (for closed-end credit) or the account will not be opened (for open-end credit), the copy must be provided “promptly upon completion” as provided for in 1002.14(a)(1), unless the applicant has waived that deadline as provided under 1002.14(a)(1), in which case as provided for in 1002.14(a)(1) the copy must be provided to the applicant no later than 30 days after the creditor determines the transaction will not be consummated or the account will not be opened.

Reference: 1002.14(a)(4); Official Staff Interpretation 1002.14(a)(4)(v)




Q&A Archives


Reverse redlining means targeting certain areas with less favorable products.

Reference: FFIEC Interagency Fair Lending Examination Procedures, August 2009.



A bank must begin to accrue interest or dividends on funds deposited in an interest-bearing account no later than the business day on which the bank receives the credit for the funds.

For the purpose's payment of interest, the bank may:

1. Rely on the availability schedule of its Federal Reserve Bank, Federal Home Loan Bank, or correspondent bank to determine the time credit is actually received; and

2. Accrue interest or dividends on funds deposited in interest-bearing accounts by checks that the depositary bank sends to paying banks or subsequent collecting banks for payment or collection based on the availability of funds the depositary bank receives from the paying or collecting banks.

Reference: 12 CFR 229.14


From the OCC examination manual:

In no case, however, should tellers and other employees, while located in the routine deposit taking area, such as the teller window, make general or specific investment recommendations regarding nondeposit investment products, qualify a customer as eligible to purchase such products, or accept orders for such products, even if unsolicited. Tellers and other employees who are not authorized to sell nondeposit investment products may refer customers to individuals who are specifically designated and trained to assist customers interested in the purchase of such products.

Reference: OCC Retail NDIP Examination Procedures, 2015, page 126



There are numerous risks that may arise from an institution’s use of third parties.

Some of the risks are associated with the underlying activity itself, similar to the risks faced by an institution directly conducting the activity.

Other potential risks arise from or are heightened by the involvement of a third party.

Failure to prevent or mitigate these risks can expose an institution to:

  • supervisory action,
  • financial loss,
  • litigation,
  • reputation damage, and
  • may even impair the institution’s ability to establish new or service existing customer relationships.

Some of the risks that may arise from a relationship with a third party include:

  • compliance risk,
  • reputation risk,
  • strategic risk,
  • operational risk,
  • transaction risk,
  • credit risk, and
  • country risk.

Reference: FDIC Compliance Examination Manual - March 2017, VII-4.2.




Loan amount less prepaid finance charges results in amount financed (Loan amount - prepaid finance charges = Amount Financed).

The amount financed contains no finance charges, as you cannot finance a finance charge.

The formula is reliant on accurate identification and input of the prepaid finance charges. In short, it’s the amount available for the consumers' use.

Reference: 12 CFR 1026.18(b)




It depends. Under Regulation O, review immediate family under 215.2(g), which includes a son. Also, review 215.2(m) under principal shareholder.

To determine whether the shares count toward the shareholder’s ownership – it must be determined whether an immediate family member resides with the shareholder.

Reference: Regulation O: 12 CFR 215.2



When the bank uses the average daily balance method and calculates the interest for a period other than the statement period, the bank must calculate and disclose the annual percentage yield earned (APYE) and the amount of interest earned based on that period rather than the statement period.

The bank must also disclose the length of both the interest calculation period and the statement period.

Reference: 12 CFR 1030.6(b) and Official Staff Interpretation 1030.6(a)(4) Length of period.




Under section 3937 of the SCRA, the maximum rate of interest on debts incurred before military service benefits applies only to loans incurred by a service member alone or by the service member and the service member’s spouse jointly.

SCRA protections do not extend to individual obligations of the spouses of service members.

Reference: Fed. Consumer Compliance Outlook, 1st Quarter 2013, as updated in Dec. 2015


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