Bankers Alliance Compliance Corner

Editor's Note: The following was submitted by Bankers Alliance. LBA, through its subsidiary Louisiana Bankers Service Corporation, has partnered with Bankers Alliance to give banks access to three compliance-related programs. Click here for more information.

Q. We had an applicant apply for a home equity line of credit. We know HELOC disclosures need to be sent out within three days for phone applications but on the day after the application was submitted, we denied it but the adverse action was sent out four days after application. Should we have sent the HELOC disclosures within three days knowing it was going to be denied because the denial letter was not sent out until after the three-day timeline?

A. In these cases the disclosures are not required if the bank in fact determined within the days that the application would not be approved. As set out below, Regulation Z permits creditors to not provide the HELOC disclosures within the three-day period if it determines within those three days that an application will not be approved. 

"Denial or withdrawal of application. In situations where § 1026.40(b) permits the creditor a three-day delay in providing disclosures and the brochure, if the creditor determines within that period that an application will not be approved, the creditor need not provide the consumer with the disclosures or brochure. Similarly, if the consumer withdraws the application within this three-day period, the creditor need not provide the disclosures or brochure." Click here for more information

Q. Do we have any Telephone Consumer Protection Act issues making phone calls to current customers to sell them other bank products?

Generally, if you have an established business relationship with the customer, there would be no compliance issues with TCPA to call them and sell other bank products unless that customer is on the bank's internal do not call list or, as a best practice, is on the national do not call list.

Reference: "(5) The term established business relationship for purposes of telephone solicitations means a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a residential subscriber with or without an exchange of consideration, on the basis of the subscriber's purchase or transaction with the entity within the 18 months immediately preceding the date of the telephone call or on the basis of the subscriber's inquiry or application regarding products or services offered by the entity within the three months immediately preceding the date of the call, which relationship has not been previously terminated by either party.

(i) The subscriber's seller-specific do-not-call request, as set forth in paragraph (d)(3) of this section, terminates an established business relationship for purposes of telemarketing and telephone solicitation even if the subscriber continues to do business with the seller." 47 CFR §64.1200(f)(5)(i). Click for more information.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933 or email and ask for our Membership Team. 

Did you know that an individual must meet two conditions to be a Mortgage Loan Originator?

  • The individual must both take a residential mortgage loan application and offer or negotiate terms of a residential mortgage loan for compensation or gain. 
  • Any individual who meets these conditions and is employed by a federally regulated institution must register with the National Multistate Licensing System.

Did you know that Regulation O Annual Surveys of Insiders should list the percentage of stock owned?

  • Banks complete an Annual Survey of Bank Insiders and Related Interests as part of Regulation O. 
  • Those who list themselves as insiders should disclose the percentage of stock owned to help assist the bank when lending or extending credit to them.
Review Alliance, an independent group of compliance specialists offering banks deep-dive audits of their existing transactions, recommendations about program enhancements or guidance on future safety and soundness. Virtual Compliance Officer was added in 2020—a new shared service-model using bank-dedicated compliance officers; perfect for monitoring and guiding your bank remotely. To learn how to put them to work for your bank, call (833)-683-0701or email and ask for the Membership Team.

Click here to sign up for a membership demo

For timely compliance updates and resources, click here to subscribe to Bankers Alliance’s email newsletters.