Missouri recently amended Mo. Rev. Stat. §525.230 to allow for higher fees to be charged by financial institutions in processing garnishment orders. Previously, the statute allowed a financial institution to charge a fee equal to the greater of $8 or 2% of the amount to be garnished, for the trouble and expense of processing the garnishment and paying over any garnished funds to the court.
Do you remember that children’s game called “Telephone” that you played long ago at birthday parties, on car trips or around campfires? You know — the game where one person passes a message to the next, and then to the next? The message evolves as it travels, inevitably surprising and confounding everyone by the time it reaches the end of the circle.
Lenders beware! A federal district court recently held that despite a lender’s use of a model form, the disclosure provided by the lender did not adequately notify the borrower of his rescission rights under the Truth in Lending Act (“TILA”) and Regulation Z. In the case of Simmons v. CitiMortgage Inc. the United States District Court for the District of Utah the borrowers successfully sued the lender to enforce their rescission rights.
The reach of the Equal Credit Opportunity Act (“ECOA”) and Regulation B (“Reg B”) has become a popular conversation topic among banking professionals. As part of that conversation, many commentators have questioned whether Regulation B prohibits the use of a spousal waiver.
If you look back at all of the regulations, guidance and enforcement actions over the past year, you will notice a very distinct trend. That is, more and more banks are being held responsible for the acts of others. For the acts of their customers. For the acts of their service providers. For the acts of completely unrelated third-parties with whom banks choose to do business. Indeed, in this regulatory environment, the consequences of not minding everyone else’s business can be devastating!
The FDIC has issued final guidance for state chartered banks regarding deposit advance products. We previously mentioned the proposed guidance and discussed applicable risks in connection with our first of two blog entries regarding changes to Missouri law that may now make deposit advance products more appealing.
Along with the CFPB’s numerous other mortgage regulations, some regulations concerning force-placed hazard insurance are set to take effect on January 10, 2014. The new regulations, which can be found in 12 C.F.R. § 1024.37, dictate a specific procedure that must be followed before a servicer can charge a borrower for force-placed insurance.
The news is rolling in from both banks and regulators — interest rate risk (“IRR”) will be a primary focus of upcoming safety and soundness examinations. In the current market of tight net interest margins and slow loan growth, regulators are concerned that banks may begin reaching for higher yields in the form of longer-term assets. This concern could be well-founded given the strong forces that are creating incentives on both sides of the closing table.
Missouri’s Senate Bill 254, which will become effective on August 28, 2013, will permit Missouri banks to charge the lesser of $75 or ten percent of the loan amount on short-term, direct deposit cash advance products. Although existing Missouri law already allows state-chartered banks to offer similar products, the fees in relation to those short-term loans were previously capped at the lesser of $25 or five percent of the loan. Due to the lower fee cap, most Missouri banks did not offer these products, presumably because the potential fees did not compensate for the related risks.