Topic: FDIC Asset Purchases
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If we purchase the assets of a failed bank through the FDIC, do we have to send the Regulation Z Notice of Mortgage Transfer to borrowers?
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We believe that a bank would have to send Regulation Z mortgage transfer disclosures after acquiring residential loans through an FDIC purchase and assumption transaction. As stated in the rule commentary, “[d]isclosures are required under this section when, as a result of a merger, corporate acquisition, or reorganization, the ownership of a mortgage loan is…
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We acquired a bank in 2010. Some accounts were already in dormant status when we purchased them. Can we rely on their inactivity and report them to the state?
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Under the Uniform Disposition of Unclaimed Property Act [Repealed effective 1/1/18], deposit accounts are presumed abandoned after five years of no communication from the owner or activity on the account (or on any other accounts that appear on the same consolidated statements). 765 ILCS 1025/2(a) [Repealed effective 1/1/18]. If the account owner has not taken any of…
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After acquiring a financial institution through an FDIC receivership, can we change all of the old bank’s loans from a 360/365 interest calculation to a 365/365 basis without notifying the customers or having them sign new loan agreements, since the change would be to their benefit?
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We believe that the bank would need to obtain the borrower’s consent before switching their loan from the 360/365 method to the 365/365 method of calculating interest. Even though this change would clearly benefit the borrower, any change to the loan agreement should be agreed to by the borrower (and obtaining their consent for any…
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If a bank purchases the accounts of another bank via the FDIC, would all security agreements and UCC filing statements have to be re-done with the new creditor’s name?
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We spoke to the FDIC’s Closed Banks and Asset Sales department in Dallas. They said that it would not be necessary to file new UCC filing statements or security agreements. A purchase and assumption agreement should govern the transaction, and there is language in that agreement to cover the security agreements acquired by the purchasing…
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If a predecessor bank offered CDs on terms that we do not offer, how should we notify customers of the change?
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We believe that a change in terms notice would be required to inform customers that they will be losing the deposit option after the next automatic renewal. Specific rules in Regulation DD address change in terms notices for time accounts that renew automatically and that have a term of one year or less (but more…
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If we are acquiring the assets of another bank, do we need to provide the debit card customers with any new disclosures?
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In general, new account disclosures may be required when the information being disclosed or the account terms differ from those of the predecessor bank. Regulation CC Disclosure Requirements For example, if any of the items required to be disclosed in your funds availability policy differs from the predecessor bank’s policy, we would recommend making new…
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Do we need to have customers re-sign their ACH authorizations after we purchase their accounts through an FDIC sale?
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We recommend that borrowers sign new Authorization Agreements for Direct Deposit so that loan payments are correctly routed to your bank.
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How are unclaimed deposit accounts handled after going into FDIC receivership?
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The FDIC has its own procedures for handling all deposit accounts of an institution after the initiation of the payment of insured deposits. 12 USC 1822(e). The statutory text describes the FDIC’s procedures: 1822(e) Disposition of unclaimed deposits 1822(e)(1) Notices.— 1822(e)(1)(A) First notice.—Within 30 days after the initiation of the payment of insured deposits under section 1821(f)…