COMPLIANCE BY BILL SHOWALTER SENIOR CONSULTANT, YOUNG & ASSOCIATES INC. TILA. Q: If the borrower shops for a title company, does the title closing/settlement fee still go into the annual percentage rate (APR) and finance charge calculations? The title company has a much higher fee than we normally encounter, which is raising the APR. A: A fee for conducting the closing/settlement is always a finance charge, no matter who imposes the fee and no matter whether the borrower shopped for the title company that is charging this higher fee. And since the borrower was shopping for a title company, it sounds like the bank requires the use of a title company and the closing/settlement service/event, which satisfies the “third-party test” you mentioned (in 12 CFR 1026.4(a)). So, put it in the finance charge and take it into account in your APR calculation. ECOA. Q: The bank has recently implemented an online application for secured consumer loans. We received an application from a borrower who lives in Pennsylvania, but we are located in Illinois. We are in the process of putting a hard stop in place in the online application program to not allow online applications for applicants outside of our bordering states. We tried to reach the applicant by phone and email to confirm that they intended to apply with our bank, but have not received a response. I do not want to send a notice of incomplete application (no income documentation provided) when we know that we would not approve a loan outside of our lending area, even if additional information is provided. I do not find that any of the standard denial reasons fit this scenario. We have not used “Other” in the past, but would it be acceptable to choose “Other” and enter “Applicant resides outside of lender’s lending area”? A: Yes, that would be perfectly acceptable. I am sure you have heard the general rule to stay away from the “other” reason — unless nothing else fits. Well, in this case, none of the other reasons fit (though, I believe some lenders will use the “we do not make that type of credit” (outside our area) reason. Your approach seems more informative to the applicant (which is the point of the adverse action notice process) than the “we do not …” approach. EFTA. Q: I am looking through Regulation E for information on periodic statements. Specifically, I am looking for support from the regulation that the bank must ensure that the customer is able to receive their statement. Our management suggested that we start charging customers a fee to mail their statements. If the customer Q & A 14 Community Banker
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