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If our ad says, when you open a new checking account we will give you $150 ($75 for a direct deposit minimum monthly deposit amount of $200 and $75 for completing a signature based transaction of $50 or more) is this considered a bonus and does it require a TISA disclosure?
From what you’ve stated it seems your add is potentially misleading by stating that you will give the customer $150 when they open the account. It seems the bonus will not be paid unless there the customer sets up a monthly direct deposit of $200 +/- and a signature based transaction of $50 or more. You should ensure that your disclosure are clear about what is required to obtain the $150.
Generally I would say that paying a bonus for establishing a direct deposit would not be considered a bonus, but I agree that by requiring a minimum monthly dollar amount to the direct deposit it could be considered a bonus.
Would all loan balances to the borrower need to be included when determining the amount of flood insurance covered needed for the improved property located in a SFHA?
Yes, you would need to consider the balance of any loans that are secured by the flood property directly or through a cross collateralization clause. I believe some banks, include, as part of their cross collateralization clause, an exemption for flood properties – essentially saying that the cross collateralization does not apply if a property is in a flood zone. You might want to consult an attorney on your options.
12 CFR 339.3 Requirement to purchase flood insurance where available.
(a) In general. An FDIC-supervised institution shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan. The amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act. Flood insurance coverage under the Act is limited to the building or mobile home and any personal property that secures a loan and not the land itself.
12 CFR 339.2: Designated loan means a loan secured by a building or mobile home that is located or to be located in a special flood hazard area in which flood insurance is available under the Act.
Would a customer flood notice be required for the new loan secured by the property in a SFHA and all subsequent loans to the customer as long as the property located in a SFHA is collateral for any loan?
Yes if the loan is cross collateralized which results in the loan being secured by a property in a flood zone, then you would need to provide the SFHA notice even if the property is not directly secured by the property in the flood zone.12 CFR 333.9 (Other regulators have the same language): “When an FDIC-supervised institution makes, increases, extends, or renews a loan secured by a building or a mobile home located or to be located in a special flood hazard area, the FDIC-supervised institution shall mail or deliver a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan.”
Does anyone know how examiners have been looking at this?
Banks have had issues with this. It will depend on the examiner you have and whether he/she/they are looking at this issue.Here are a few links to outside sources that have brief discussions on this issue: https://biotech.law.lsu.edu/blog/commercial-flood-insurance.pdf
https://www.fdic.gov/news/conferences/NY/2012-12-03-qa.pdf
https://www.kansascityfed.org/~/media/files/publicat/banking/regulatoryseminars/2016-cc-hottopics.pdf (See page 6 – 2016 Top 5 violations)Based on the definitions from the IRS (see below),I don’t believe it would fit into the second category as a defined contribution, but that is something you would need to confirm with an accountant or tax professional.
I do believe it would be considered compensation and would be included in the total in order for compensation to be considered consistently among your employees. In the preamble to the final rule it mentions that the reason for attaching the w-2 amounts to the definition of total compensation in the commentary was to make things easier on creditors because they are already preparing that information.
I recommend you contact your regulator and get their opinion.
IRS Definitions:
1) https://www.irs.gov/retirement-plans/plan-participant-employee/definitions
and
2) Internal Revenue Code section 414(j), 26 U.S.C. 414(j):
(i) Defined contribution plan
For purposes of this part, the term “defined contribution plan” means a plan which provides for an individual account for each participant and for benefits based solely on the amount contributed to the participant’s account, and any income, expenses, gains and losses, and any forfeitures of accounts of other participants which may be allocated to such participant’s account.
(j) Defined benefit plan
For purposes of this part, the term “defined benefit plan” means any plan which is not a defined contribution plan.Great question. I have asked Don Blaine to respond. He will get back with you as soon as possible. Thanks for your patience.
The flood regulations state:
Except as provided in paragraphs (a)(2) or (c) of this section, an FDIC-supervised institution, or a servicer acting on its behalf, shall require the escrow of all premiums and fees for any flood insurance required under § 339.3(a) for any designated loan secured by residential improved real estate or a mobile home that is made, increased, extended, or renewed on or after January 1, 2016, payable with the same frequency as payments on the designated loan are required to be made for the duration of the loan.This is a great question and I don’t believe there is anything that specifically addresses it. In my opinion, if the loan did not experience a MIRE event on or after January 1, 2016 then you are not required to escrow flood insurance. However, if the loan were made, increased, renewed or extended after January 1, 2016 we do not believe you would have the option to cancel the escrow of flood insurance.
Subpart D applies to all deposit accounts as defined in Reg. D, 12 CFR 204.2(a)(1)(i). This includes transaction, savings, MMDA and time deposits.
However, the expedited re-crediting rules under 229.54 and the notification requirements under 229.57 only apply to consumers/consumer accounts.
The de minimis exception applies to someone who has never been registered as an MLO and has not originated more than 5 residential mortgage loans in the past 12 months. For your new employee that was not previously registered you might be able to argue this exception; however, since he/she has been registered and his/her registration is processing it could be argued that it would not apply. In my opinion the exception would not apply to the new employee that was already registered. I would recommend waiting until their NMLS registration is complete/updated before allowing them to act as MLOs. Also check your SAFE Act policy to ensure you comply with its requirements.
As for SAFE Act penalties, the final rule references the agencies authority under 12 USC 1818 (see footnote).\
The OCC, Board, FDIC, and OTS have the
authority to take enforcement actions against their
respective Agency-regulated institutions and
individual employees of those institutions who
violate the S.A.F.E. Act and this final rule, pursuant
to 12 U.S.C. 1818.12 USC 1818 allows for various actions, but 1818(i) refers to CMPs.
mdunker,
I have talked to Jack.
He researched several Social Security publications and found that they indicate such income can be used to help a guardian provide housing for the beneficiary. It is even suggested that the tax-free income be grossed up for underwriting purposes. It also suggested that if the beneficiary is within three months of his/her eighteenth birthday the income may not be acceptable for underwriting.
Again, this information is based on our interpretation of the information we read in various SS publications. We suggest you verify how guardianship benefits may be used with a specialist from the Social Security Administration or an attorney that specializes in SSI.
I have similar concerns. Obviously the regulations have not kept up with social media. I’ll have to do some looking into this to see what I can find.
Great question…
My initial thought is that if these funds are being paid to a guardian for the care of the beneficiary of the funds, so in a representative payee capacity, then they would not be considered income of the guardian in determining his/her ability to repay a loan.I’m going to run this by Jack to get his thoughts.
mdunker,
I’m following up on your post above. There doesn’t seem to be an easy link to provide to now that the weekly average rates are downloadable and take a few clicks to access. With that in mind, since you can still access the information through the link above my opinion is that the link is still acceptable to use.mdunker,
It has been a while since I’ve looked at these rates. I pulled up the link you provided and found a link at the bottom that took me to the downloadable weekly rates. It was difficult to find and did required a few additional clicks. I assume that is where you are pulling your rates, is that correct?Generally, the policy zone should match the determination. In this case the current zone does match the determination, but the rating zone is the previous zone due to this being a newly mapped property which qualifies for a preferred risk policy. So there is a rating zone and a current flood zone; both should be shown on the dec sheet for of a preferred risk policy. Here is a link to information from banking regulators on what should be included on the prp dec sheet: https://www.fema.gov/media-library/assets/documents/21039?id=4560.
In addition, FEMA’s Flood Insurance Manual has instructions for newly mapped prp applications. Under those instruction for completing the newly mapped prp policy application, it does ask for the risk zone (zone and map information from the FIRM most recently indicating that the building was outside the SFHA) and the current zone and supporting information for both. Here is a link to the policy application instructions: https://www.fema.gov/media-library-data/1478090950077-c38cb614e4a2f093d7656577c9ffb0fd/10_newly_mapped_508_oct2016.pdf. (See p. NM 12.)
