Section 1026.36(j) states, ” A depository institution must establish and maintain written policies and procedures reasonably designed to ensure and monitor the compliance of the depository institution, its employees, its subsidiaries, and its subsidiaries’ employees with the requirements of paragraphs (d), (e), (f), and (g) of this section. These written policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage lending activities of the depository institution and its subsidiaries.”

  • Section 1026.36(d) limits compensation paid to loan originators;
  • Section 1026.36(e) prohibits certain steering loan practices;
  • Section 1026.36(f) established certain qualification requirements for loan originators; and
  • Section 1026.36(g) requires that the loan originator’s name and NMSLR ID appear on certain documents.

From various recent conversations with bankers, examiners and auditors it is apparent that a number of creditor’s have not yet established written policies and procedures for these sections of Regulation Z. The failure to do so results in violations of federal law.
Has your bank implemented the required policies and procedures?

  • If so, congratulations, you are sitting right where you should be.
  • If not, what is your plan to establish these policies and procedures as quickly as possible?