tiers at higher rates, then this again would seem to benefit the customer. But if any rates in any new tiering scheme are lower than the customers’ existing rates, then there is no benefit to the customer. If a change unequivocally benefits a customer for the remaining term of their account, then advance written notice is not required. Otherwise, notice must be sent at least 30 days before the change is effective. The bank should also consult with its legal counsel to determine if your state law allows such unilateral changes to deposit contracts, or if you need the customer’s agreement. Any change-in-terms notice, whether on/with a periodic statement (if all required language can be fitted in) or mailed separately, would need to fully disclose what the change consists of. The general language the bank proposes does not appear to fulfill the information requirements of Regulation DD for a change-in-terms notice. There are no account-specific details, which are required. This generic message could serve as some sort of early notice of potential upcoming changes, with more specific, TISA-compliant notices to come later when specific changes are made. ECOA. Q: Do the reasons on the adverse actions notice (AAN) for a loan applicant and the co-applicant need to be the same on the separate notices? May we list just the value or type of collateral not sufficient on the AAN for the co-applicant, or do we have to also show all of the reasons that the primary applicant is being denied? We received a loan application with a co-signer. We are denying the loan application for multiple reasons. The primary applicant has poor credit history, too high of a debt-to-income ratio and wants an unsecured loan. His AAN is straightforward. The issue is the AAN for the co-signer. He would be a good co-signer except he also wants the loan to be unsecured. The lack of collateral is the sole reason we are denying him. While we do make unsecured loans, such loans are generally for people we have a long history with and are for small dollar amounts. This loan is to be for $12,000, and the applicants have no history with us. A: No, the reasons for adverse action do not have to be identical on co-applicants’ AANs. The reasons may be identical since the Federal Reserve Board in the past basically said there should be no expectation of privacy among multiple applicants for credit. However, it is permitted to tailor the reasons disclosed for each applicant and put only the reason(s) that apply to that applicant on their individual AAN. EFAA. Q: The bank generally makes funds available the day after the deposit is made. When placing a large deposit check hold, I know that the first $275 must be available the day after the deposit, and the next $6,450 is subject to a two-day hold. Do we have to give a case-by-case hold notice for the two-day hold? If so, can we show both holds on the same notice? We would give the large deposit hold notice for the balance over $6,725. A: Yes, a case-by-case hold notice must be given if the bank wants to impose a two-day case-by-case hold on the bulk of the first $6,725 ($6,450). And, yes, the notice can be combined with the large deposit exception hold notice for the amount that exceeds $6,725. In fact, at least some of the forms companies (well, now software providers mostly) have a special combined form for large deposit holds — the case-by-case hold for the first part of the deposit and the exception hold for the excess amount, all on one form/notice. TILA. Q: We closed a TRID mortgage for a borrower four years ago on a horse farm/boarding/training facility with their personal residence. Now, the borrower would like a second loan to add on two buildings and expand the horse arena. I intend to place a junior lien on the real estate. This is a business-purpose loan, but since the first mortgage was done as a consumer loan under TRID, I am confused about how to do this second loan. Any guidance? A: The previous loan does not impact this subsequent loan. Lenders need to look at each loan transaction on its own. It sounds like the first mortgage must have been primarily for consumer purposes, so the bank followed TRID rules. But, if this current loan transaction is to be primarily for business/commercial/agricultural purposes, then it is exempt from Regulation Z — no TRID (or other TILA) disclosures or rescission required. Keep in mind, of course, the flood insurance rules and fair lending (nondiscrimination) requirements do still apply. Young & Associates provides banks and thrifts with support for their compliance programs, independent reviews and in‑bank training, as well as a full menu of management consulting, loan review, IT consulting and policy systems. 16 Community Banker
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