Pub. 9 2021 Issue 3

The Community Banker 19 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 TILA. Q: Can we do a balloon loan for a loan secured by non-real estate investments? The applicants are purchasing real estate. Is there anything special we would need to do? I know on real estate loans that we would need to know that they could pay the loan without the investments and have the funds to pay the balloon. I don’t believe that it is the same for non-real estate loans. A: A legal question is whether the bank can extend a balloon loan secured by non-real estate investments. You will need to check with the bank’s legal counsel on that one. Even though this loan is to be used to purchase real estate, since a dwelling does not secure it, the “ability to pay/qualified mortgage” (ATR/QM) rules in Regulation Z will not apply. If the loan is for a personal, family, or household (consumer) purpose, then “regular” Regulation Z disclosures (“Fed box”) will be required. If it is not for a consumer purpose, then Regulation Z does not come into play. ECOA/FCRA. Q: One of my branch managers recently asked me if we’re required to send out a notice of action when denying someone a deposit account. Can you send me some guidance on this? A: There is no Regulation B-like requirement for sending a notice of the action taken and disclosing the adverse action taken and the reason(s) for it. (There is also nothing to prohibit giving such notice.) However, like with credit applications, if banks take adverse action for a deposit account application based on a “consumer report,” then the Fair Credit Reporting Act (FCRA) does require that notice be given to the applicant. This notice would include the information about using a credit reporting agency and its name, address, etc. That is normally included in the second part of our credit adverse action notices. So, the answer is yes and no. Yes, an FCRA adverse action notice must be sent if third-party information is used at all in making the decision. But no, a Regulation B-like notice of the action taken and reasons does not have to be given (but maybe). EFTA. Q: If a customer calls the bank and says his son stole his debit card and used it, do we still need to file Visa chargebacks per Regulation E for this customer or does this customer need to get law enforcement involved? A: This customer’s call is a notification of unauthorized use and must be handled and investigated by the bank just like any other such notice would be. Before beginning its investigation, the bank may not require the customer to file a police report, etc. The investigation may be easy since the customer is providing much of the information needed. Whether to involve law enforcement is up to the bank, probably in consultation with your customer. Continued on page 20