Pub. 7 2019 Issue 4

10 The Community Banker www.mibonline.org COMPLIANCE Q&A — WINTER 2020 By Bill Showalter, Senior Consultant, Young & Associates, Inc. Compliance Q&A TILA. Q: We closed a purchase loan in which the real estate broker charged our borrower a $129 transaction fee. We did not know this at the time of the Loan Es- timate (LE) and this fee was not disclosed to the borrower on the LE. Based on my reading of the TRID rule, because this fee is located in section H on the Clos- ing Disclosure (CD), this is a fee that can change without regard to any tolerance concerns. Is this correct? A: Yes, as long as the bank did not require the third-party service covered by the fee. ECOA. Q: While performing our Marijua- na-Related Business (MRB) training, the question was posed if we could face a Reg B issue by denying a loan application if the loan applicant was truly an MRB. Is this a possibility? Would we want to take the loan application and then send an adverse ac- tion notice denying the loan, or should we not take the application in the first place? A: The best course would be to take an application from a prospective applicant. Then, if the applicant truly is an MRB, and the bank has decided not to lend to MRBs (and documented this determination in its loan policy), the application may be denied on that basis. UDAAP. Q: We have a relatively new relationship manager who is very eager and being heavily encouraged to gain new business. She has developed a flyer of our current products, including our existing deposit account products and plans to mail them to potential bank customers. Since our new checking account launch is a little more than two months away, I am leery of her promotion of current fee- free products, knowing that at the time the new accounts are launched, existing checking account customers will be put into the account most suited for them, with a fee structure. I fear that examiners (and customers) may think we are using “bait and switch tactics” to gain new customers of a no-service-charge check- ing account, and then switching them to a checking account that has a service charge, even though they have options to “waive” the charge. The last thing I want is for the bank to get a UDAAP violation. Am I over-analyzing this, or do I have a legitimate concern? A: You have a legitimate concern. You hit the nail right on the head. Since the bank is so advanced in the development of the new checking accounts that have service fees, it could easily be seen as a “bait and switch” situation to heavily promote existing fee-free accounts right now, knowing that within a few months these accounts will be converted to the new accounts with service fees (even though there will be ways to avoid the fees). It would probably be better to hold off on promoting checking accounts until it is time to launch the new ones and promote some other bank product(s) in the interim.