So, Regulation O would not compel the bank to return the item. Beyond that, it is up to bank policy and procedures or management discretion (in the absence of such policy and procedure). PMI. Q: We modified a mortgage loan that had private mortgage insurance (PMI). The scheduled termination date is upon us and the loan-to-value (LTV) ratio is not at 78%. Should we send a new amortization schedule and an explanation of why the cancellation date will not be met? Or, in light of the bank modifying the loan to help the customer, is this even necessary? A: The modification does not enter into consideration for PMI coverage/ termination. If the customer is current on their payments at this time and — under the original amortization schedule for the loan — it has reached the point at which the loan was first scheduled to reach 78% of the original value of the property, then the bank “shall” (read this word as “must”) terminate the PMI and the borrower owes no more PMI payments. If the borrower is not current on their payments at this time, then the PMI must be terminated at the time the customer brings their payments current. Record retention. Q: We keep a paper copy of a loan for five years in a physical file. We are also scanning those copies into our core system. As long as we have a copy somewhere that we can access at any time, are we okay to just scan them and not keep a hard paper copy? We can always print the scanned document in the future, if need be. A: To satisfy the record retention requirements of the various federal consumer rules, scanned/e-copies are just fine. However, I cannot speak to any rules or expectations that may impact legal documents (e.g. notes, mortgages, account agreements, etc.). For those, you will need to consult with the bank’s legal counsel. The federal E-Sign Act may have overridden all that kind of thing, but that is a legal issue and I must defer to your attorney. 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. Closing SBA loans keeps doors open. Call 800.340.7304 to start www.holtandmon.com Your customers have never needed capital more than they do right now. Plus you need to offset narrowing margins by increasing noninterest fee income. SBA/USDA lending is the perfect answer. And ICBA recommends just one provider to make the process hassle-free: Holtmeyer & Monson. Give customers exactly what they need, at no net cost to your bank. Small businesses count on your expertise. You can count on ours. 24 Community Banker
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