Pub. 10 2022 Issue 1

The Community Banker 17 Call me at 406.850.3790 Based out of Billings, Mont. serving Montana, Wyoming and Idaho Commercial & ag participation loans Bank stock & ownership loans Bank building financing Business & personal loans for bankers Craig McCandless Together, let ’s make it happen. Member FDIC 28934 We do not reparticipate any loans. Leverage our large lending capacity, up to $20 million on correspondent loans. Our lending limits are high enough to accommodate what you need, when you need it. Why choose Bell as your bank’s lending partner? 28934 AD Community Bankers Association of Montana 2021_Craig_V1.indd 1 1/6/21 3:47 PM Continued on page 18 area. On the Retail side, we have the borrower sign the Borrower’s Authorization form for us to pull credit. Is permission required? A: No, not for consumer (personal, household, or family) purpose loans. The FCRA does not require that a signature be obtained by the financial institution before obtaining the credit report. A lender may obtain a credit report when it intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer. However, the “permissible purpose” to pull a credit report in relation to a loan is only for consumer purpose credit. For business or agricultural purpose credit, the lender would indeed have to obtain permission from individuals involved in the transaction before pulling their credit reports. Regulation D. Q: Is a for-profit LLC permitted to hold a negotiable order of withdrawal (NOW) account or money market deposit account (MMDA)? A: No and yes. No, an LLC is a corporation, so a forprofit LLC is prohibited from holding a NOW account. However, there is no similar prohibition against a corporation holding an MMDA (or other savings deposit). This treatment based in what seems like distant history, from back in the days of interest rate limits on savings deposits and a prohibition against paying interest on demand deposits. The NOW account was initially an experiment that was ultimately extended nationwide, but was limited to individuals, governmental units, non-profits, and a few other entities. For-profit corporations were prohibited from holding these savings accounts (depositories have to reserve the right to require advance notice of withdrawals) with unlimited transaction capabilities. The Dodd-Frank Act (2010) rescinded the statutory prohibition against paying interest on demand deposit accounts (DDA) but left the NOW account provision in Regulation D untouched. Therefore, any entity may hold an interest-bearing DDA, while NOW account ownership remains limited. MMDAs are a savings deposit that initially had transaction limitations, so a NOW-like restriction on ownership was never imposed on MMDAs. For-profit businesses are free to hold MMDAs, as well as other savings deposits.

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