Compliance Q&A: Regulation B Loan Approvals

Does Regulation B require loan approvals to be in writing?

February 1, 2014

Q: Does Regulation B require loan approvals to be in writing?

A: No. Regulation B (Equal Credit Opportunity) requires adverse action notices to be provided in writing for consumer credit—Sec. 1002.9(a)(2).

However, a notification of approval may be express or by implication. For example, the credit union will satisfy the notification requirement when it gives the applicant the credit card or other services requested— Reg B Commentary, Paragraph 9(a)(1) -2.

Q: Is a credit union permitted to offer a reduced annual percentage rate (APR) or other incentive if the member signs up for automatic repayment of the loan?

A: Yes. Regulation E (Electronic Fund Transfers) allows a credit union to offer a program with a reduced APR or other cost-related incentive in connection with automatic repayment, provided the program isn’t the only one offered by the credit union for the type of credit involved.

A credit union cannot require repayment of loans by preauthorized electronic fund transfer, except for credit extended under an overdraft credit plan or extended to maintain a specified minimum in a member’s account—Reg E, Section 1005.10(e).

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