TILA. Q: We have a loan that is a consumer installment loan. The loan officer took a vehicle as collateral and then, as additional collateral, they took a third lien on a real estate property that is not the customer’s primary dwelling.

We know the loan officer must obtain a flood hazard check and an evaluation of the property. Since this is being uploaded as a consumer installment and not as a mortgage loan, would the loan officer have to produce Loan Estimates (LE) and Closing Disclosures (CD) for the customer because the loan has a real estate property as collateral, even though taken as an abundance of caution?

A: Abundance of caution does not change anything here. Once you take real estate as collateral for a consumer-purpose loan, regardless of the reason, you have a TRID loan with a car as additional collateral. How you classify it in-house is up to you and does not affect TRID coverage.

HMDA. Q: I am torn on this one. We have a manufactured home that’s titled but built in 2020. It appears that we did this credit as an “auto loan” (because of the title, I believe). But reading online, it looks like if a manufactured home is titled and built after 1976, it would be HMDA reportable, is that correct?

A: Yes. Regulation C [12 CFR 1003.2(f)] defines “dwelling” as “a residential structure, whether or not attached to real property. The term includes but is not limited to a detached home, an individual condominium or cooperative unit, a manufactured home or other factory-built home …”

ECOA. Q: We received an application, and my brain is circling on what would be the proper denial reason.

Their current debt-to-income (DTI) ratio is 63%. They’ve applied to us for a refinance/consolidation that would bring their DTI down to 51%. Both exceed our DTI standards. However, would we use “excessive obligations in relation to income” or “insufficient income for the amount requested” as our reason for denial?

I’m leaning towards “insufficient income for the amount requested” because they’re applying for a consolidation. However, the lender believes it should be “excessive obligations in relation to income.”

A: The lender is correct. “Excessive obligations” means they are already over the maximum DTI. “Insufficient income” means the new loan will put them over the maximum DTI.

TISA. Q: I have a “round-up savings” question. Is it a compliance requirement that all parties on a joint checking account authorize the automatic transfers (round-ups) to the linked savings account? When enrolling accounts in such a program, should the bank require all joint owners to agree to the terms?

A: Regulation DD does not include or address a requirement that all parties on a joint checking account authorize the automatic transfers (round-ups) to the linked savings account.

This would be a matter for the “account terms & conditions” (the contract), which is a legal document. You need to consult with the bank’s legal counsel.

BSA. Q: I am in the midst of reviewing 2025 transaction activity for our Phase II CTR exempt customers. One such customer had four daily deposits to the business checking account in excess of $10,000. (I know five is required during the review period for continued exemption.) There were three other days throughout the year where the deposit was greater than $9,000 but less than $10,000. However, the deposit combined with a same-day currency exchange pushed the daily total currency figure above the $10,000 mark. The currency exchanges were handled outside of the deposit account. I know currency exchange transactions greater than $10,000 that are handled outside of an exempt account are considered reportable transactions.

My question is whether these days, where total cash activity exceeds $10,000 by combining deposits and exchanges, count towards continued exemption. If not, I have only four qualifying days and will have to revoke the exemption.

A: Currency exchanges are added to a day’s deposits (and withdrawals). However, the issue here is the fact that the currency exchange is outside of an exempt account. 

From FinCEN’s “Guidance on Determining Eligibility for Exemption from Currency Transaction Reporting Requirements” in section H. Exemptible transaction accounts:

“Question: The definition of a Phase II ‘exempt person’ in 31 C.F.R. § 1020.315(b)(6) and (7) includes the phrase ‘only with respect to transactions conducted through its exemptible accounts.’ Does this mean that certain transactions of Phase II exempt customers require the filing of a CTR?

Answer: Yes. The scope of the exemption for non-listed businesses and payroll customers is limited by several criteria. While the final rules reduced those criteria with respect to the number of transactions and the waiting period before a bank could treat those customers as exempt, they did not alter the remaining criteria for Phase II customers, including the provision that a Phase II customer is exempt ‘to the extent of its domestic operations and only with respect to transactions conducted through its exemptible accounts.’ For transactions conducted by the customer outside of the criteria for Phase II customers, the customers would not meet the definition of ‘exempt person’ and could not be treated as exempt by the bank.”

That last sentence clearly applies to your situation. The days when the currency exchanges caused the daily total currency transactions to exceed $10,000 are not counted in the number of days for qualifying as an “exempt person.”

Insider Credit. Q: Our chairman of the board wants to purchase a second/vacation home. He needs to borrow $1,000,000. Reading Regulation O, it states that a member bank is authorized to extend credit in any amount to finance or refinance the purchase, construction, maintenance or improvement of a residence of the executive officer (EO), provided the extension of credit is secured by a first lien on the residence and the residence is owned by the EO.

Financing will be a first mortgage purchase transaction on a residence of the executive officer. He also owns his primary residence, but it is free and clear. 

My uncertainty is whether “a residence” includes a second/vacation home or only the primary residence. It is also our understanding that he will not use the second/vacation as a rental; it will strictly be used for his family.

A: Good news for your chairman. Since his primary residence is free and clear, the unlimited amount exception for a residence may be used for this second/vacation home. 

An executive officer may have multiple residences at any one time, and the unlimited amount exception does not apply just to their primary residence. However, they may have only one loan at any one time that is taking advantage of this exception. If your chairman had had an existing loan on his primary residence, it likely would have made this second/vacation home ineligible (depending on the amount of the existing loan).

Flood Insurance. Q: We have a question about flood rules. We are a Federal Reserve regulated bank, and we notify a borrower 10 days prior to closing when a property is in a flood zone. The question I was asked is if the borrower gets the flood insurance in place, can we close the loan before the 10 days expires?

A: Yes, as long as the bank has received acceptable evidence of adequate flood insurance coverage. A declarations page will suffice; a binder will not.

SAFE Act. Q: Is it a requirement of the regulation that a listing of all employees who have an NMLS number be listed on the bank’s website? If not a requirement, would it be a “best practice”?

A: No, there is no requirement to post such a list on the bank’s website. A notice must be posted in the bank, but anything beyond that is pretty much up to the bank. As the regulators stated in the final rule release, lenders are free to go beyond the minimal requirements in the SAFE Act rule.