Pub. 5 2015-2016 Issue 2

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S September • October 2015 15 Darlia Fogarty, Director of Compliance, brings a wealth of knowledge and practical experience to our banks as well as our staff. After 12 years as a commissioned national bank examiner with the OCC, Darlia developed an expertise in compliance while administering examinations in banks of all sizes. She contributed as a member of the Retail Credit Team, with a Compliance Designation. Darlia also holds 10 years of experience as a compliance officer/auditor and 4 years as a compliance/audit consultant. Darlia has spoken at a number of conventions, meetings and schools throughout the years. Her articles can be found in State Banking Association magazines, Compliance Alliance newsletters and several other publications. Darlia oversees the creation of tools and resources while also fielding questions from a wide range of regulatory and compliance issues faced by banks of all sizes. 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, visit compliancealliance.com, or email info@compliancealliance.com . renew a loan secured by a building or mobile home located in a special flood hazard area unless is covered by flood insurance for the term of the loan. What determines if flood insurance is required? The type and location of the collateral, however the purpose of the loan (whether it is consumer or commercial) does not matter at all. Are there nuances in the requirements? Absolutely. Training should be mandatory for all loan staff. While we are talking about typical consumer protection regulations that are not typically considered when discussing requirements for commercial lenders training schedule, is the Servicemembers Civil Relief Act (“SCRA”). This regulation pro- vides protection to service members, and in some cases, their spouses, dependents and other persons subject to the obligations of service members. These protections apply to loans contracted prior to entering military service, and you guessed it, does not make a distinction between consumer and commercial credit. Are there other regulations that make no distinction between consumer and commercial customers? Yes, there are. One of those is the requirements under the Home Mortgage Disclosure Act (“HMDA” - Regulation C). Even though mortgages are the primary focus for the requirements in this regulation, there are implications for certain commercial loans. HMDA requires reporting of multi-family loans which are typically commercial loans. There are also some nuances that can lead to confu- sion. For example, a customer takes out a loan for a business purpose to be secured by the customer’s primary residence, the loan would not be HMDA reportable at origination, but if it were refinanced, then it would become reportable. Why, you ask? Well, the regulation requires all refinancings of dwelling secured loans to be reported. Now you are beginning to see the need for training. Another regulation that may be overlooked when listing regulations that have implications for compliance is the Fair Credit Reporting Act (“FCRA”). While the regulation specifically states it is to regulate the furnishing and collecting consumer credit information, there are instance that commercial credit transactions involve a consumer. For instance, guarantors or co-makers inmany instances, are consumers. You will also find adverse action requirements in this regulation as well. If the above regulations and the implications to commercial credit isn’t enough to persuade the commercial credit side of the house to participate in consumer compliance training, remind them of the monetary penalties that accompany violations of many of these regulations, and hopefully training will be readily accepted. 