In addition to CUNA’s compliance resources such as CompBlog, eGuides and other materials, CUNA’s compliance staff fields questions from members on a regular basis.
See below for some of the most commonly asked questions and answers from CUNA compliance staff.
Q: A credit union has just approved a new mortgage loan to be used to construct a new home that will become their principal dwelling upon completion of construction. This new loan is secured by equity in the borrowers’ current principal dwelling. Is this new mortgage loan subject to the right of rescission?
A: The loan is subject to the right of rescission because of a special Regulation Z principal dwelling rule.
The commentary to Regulation Z Section 1026.23(a) 3 states that generally a consumer can have only one principal dwelling at a time and the general rule is that when the consumer buys or builds a new dwelling that will become the consumer’s principal dwelling within one year or upon completion of construction, the new dwelling is considered the principal dwelling if it secures the purchase loan or construction loan.
In that case, the transaction secured by the new dwelling is a residential mortgage transaction and is not subject to the right of rescission.
However, the “Special Principal Dwelling Rule” found in Section 1026.23(a) 4 of the commentary states that when the consumer acquires or is constructing a new principal dwelling which is secured by equity in the consumer’s current principal dwelling, that loan is subject to the right of rescission regardless of the purpose of the loan.
Q: Can a credit union charge a fee for investigating an alleged unauthorized debit card transaction electronic fund transfer (EFT) error?
A: According to the Consumer Financial Protection Bureau’s (CFPB) staff commentary to Regulation E, an institution cannot charge a fee for investigating or resolving an EFT error:
Regulation E's definition of "error" includes unauthorized EFTs, as well as incorrect EFTs to or from a member's account, the omission of an electronic fund transfer from a periodic statement, the credit union's computational or bookkeeping error and the member's receipt of an incorrect amount from an electronic terminal.
The regulation's definition of "error" also includes a member's inquiry to determine whether or not an error exists.
However, it does not include a member's routine inquiry concerning the balance in an account, or a request for information for tax or other recordkeeping purposes.
Q: What’s the process for filing a corrected or amended Suspicious Activity Report (SAR) in the Financial Crimes Enforcement Network’s (FinCEN) Bank Secrecy Act (BSA) E-Filing System?
A: According to FinCEN’s SAR Frequently Asked Questions, credit unions should check “Correct/amend prior report” and enter the previous Document Control Number (DCN)/BSA Identifier (ID) in the appropriate field.
To find the DCN/BSA ID for the previous filing, you’ll need the acknowledgement you received after successfully submitting the report into the BSA E-Filing System. If the previous DCN/BSA ID is not known, filers should enter all “zeros” (14 in total) for the previous DCN/BSA ID. (See Q&A #7)
The credit union should then complete the FinCEN SAR in its entirety, including the corrected/amended information and noting those corrections at the beginning of the narrative, save (and print, if desired) a copy of the filing, and submit the filing. The corrected/amended FinCEN SAR will be assigned a new BSA ID.
Q: Are credit report fees considered finance charges under Regulation Z?
A: Credit report fees are not considered finance charges on transactions secured by real property but are considered finance charges for all other loans.
Regulation Z Section 226.4(b)(4) indicates that credit report fees are considered finance charges unless specifically excluded. Paragraph (c) states that credit report fees are excluded from the finance charge for transactions secured by real property or in a residential mortgage transaction if the fees are bona fide and reasonable in amount.
Therefore, credit report fees are not considered finance charges for mortgage loans as-long-as they are bona fide and the amount is reasonable, however credit report fees are considered finance charges for all other loans.