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: Does RESPA require that we collect a cushion for escrow accounts? How large of a cushion must be collected?
A: RESPA allows you to have up to 2 months' cushion in an escrow account but doesn't *require* that you have 2 months' cushion. "Cushion or reserve (hereafter cushion) means funds that a servicer may require a borrower to pay into an escrow account to cover unanticipated disbursements or disbursements made before the borrower's payments are available in the account, as limited by § 1024.17(c)." 12 CFR § 1024.17 Click here to view. "...In addition, the servicer may add an amount to maintain a cushion no greater than one-sixth (1/6) of the estimated total annual payments from the account..." 12 CFR § 1024.17(c)(
Q: Can CD early withdrawal penalties be waived? Are there any requirements that need to be met?
A: A bank cannot waive the early withdrawal within the first seven days of opening the account (unless certain rare exceptions apply, like the account holder's death), but otherwise may waive an early withdrawal penalty if the account is closed prior to maturity without violating Regulation D. See 12 CFR §204.2(c)(1)(i) ("Time deposit means . . . [a] deposit that the depositor does not have a right and is not permitted to make withdrawals from within six days after the date of deposit unless the deposit is subject to an early withdrawal penalty of at least seven days' simple interest on amounts withdrawn within the first six days after deposit.") Click here to view.
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 info@compliancealliance.com and ask for the membership team.
Did you know that the right to rescind can be waived in certain circumstances?
- A “bona fide personal financial emergency” is a valid reason to waive the right of rescission on a mortgage loan.
- Lenders are required to collect a written statement describing the emergency and stating the right to waive rescission.
- This statement must be signed by anyone sharing ownership of the property.
Did you know that banks should review their mortgage loan originator’s registration with the Nationwide Multistate Licensing System Resource Center on a periodic basis?
- As staffing changes occur, the bank should be updating NMLS Resource Center information.
- An additional periodic review of registrations will help ensure that customers are able to gather accurate information when searching the database.
Review Alliance is 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 info@bankersalliance.org and ask for the membership team.