Topic: Human Resources
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Is there a regulation that prohibits bank employees from accepting gifts from clients over $25.00? We have such a prohibition in our employee handbook, but we wanted to confirm whether any regulation established a dollar amount.
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No, we are not aware of any federal or Illinois law or regulation that establishes a specific dollar limit on gifts from clients to bank employees. The limit is driven by your bank’s internal ethics policy. Federal criminal law imposes stiff penalties on bank employees who accept anything of value “to be influenced or rewarded…
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Should we treat credit and loan review analysts as exempt or non-exempt employees? We know that the Department of Labor (DOL) was pushing more jobs into the non-exempt category, including mortgage loan originators.
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It is possible that your bank’s credit and loan review analysts (for the purposes of our answer, we are treating credit underwriters and loan review analysts as the same) may be considered exempt employees, based on their job duties and other circumstances. We recommend consulting with an employment attorney for a determination of whether any…
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Currently, our loan originators receive the same flat commission for traditional closed-end mortgage loans as for closed-end home equity loans. Our traditional mortgage loans typically have 15 – 30 year terms, with higher closing costs and lower rates, and our home equity loans typically have shorter terms, at lower loan amounts, with no closing costs but higher interest rates. Can we reduce the commission for the home equity loans, since they often are not as profitable as traditional mortgage loans (due to the lower loan amounts and closing costs)?
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We do not recommend varying the compensation paid to loan originators based on the type of loan originated, due to Regulation Z’s prohibition on compensating a loan originator “based on a term of a transaction” or “a factor that is a proxy for a term of a transaction.” We believe that lowering the loan originator…
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We compensate our loan originators based on loan volume. We are considering hiring a loan originator who would act as a team lead who would manage other loan originators. To incentivize this employee to mentor and encourage those team members, we would like to compensate the team lead for the production of the team members. Can we compensate a loan originator for loans originated by other employees?
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Yes, we believe that your bank may compensate loan originators based their team members’ loan volume (in addition to their own loan volume). Regulation Z prohibits loan originator compensation that is based on the terms of the transactions that they originate. But this prohibition does not apply to compensation based on an individual loan originator’s…
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We plan to start offering health savings accounts (HSAs), initially to employees, and later to the public. Do we need to list the bank as custodian on HSAs? Do we need to list the bank as a custodian on individual retirement accounts (IRAs)?
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We recommend consulting with a tax professional, but in our view, your bank can serve as either a custodian or trustee of an HSA, but it must serve as a trustee of an IRA. Under the Internal Revenue Code and IRS guidances, an HSA is a “trust” that must be established with a “qualified trustee”…
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Our bank is hiring for an open position. We pulled credit reports for the applicants (with their consent), without obtaining numerical credit scores. One applicant had a number of negative items on their report. The hiring employee emailed the applicant regarding the report, identifying the negative items and including verbiage from the report regarding those items. Would this violate the Fair Credit Reporting Act (FCRA)?
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No, we do not believe that sharing information from a job applicant’s credit report with that applicant would violate the FCRA. Nothing in the FCRA prohibits the sharing of information from a credit report with the consumer who is the subject of the report. In fact, the FCRA may require your bank to share some…
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We fired an employee for falsely inflating the hours she worked, resulting in overpayment. Do we need to file a suspicious activity report (SAR) regarding her conduct? We are a national bank.
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In our view, a SAR is not required in this situation, but it might be prudent to file one in any event. The OCC regulations require a SAR when a bank detects that an “insider” — such as a bank employee — has committed a federal crime against the bank, regardless of the amount involved.…
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Our understanding of the Regulation Z loan originator compensation rules is that we can pay bonuses based on the amount of new credit extended. If we pay bonuses that are based only on the amount of new credit originated by a particular loan originator, are we subject to the 10% limitation? Does it matter if the bonus is paid out of overall bank profits and not just mortgage loan profits?
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No, we do not believe that bonuses based on a loan originator’s total loan volume are limited to 10% of the loan originator’s total compensation. Regulation Z generally prohibits creditors from compensating a loan officer “based on a term of a transaction, the terms of multiple transactions by an individual loan originator, or the terms…
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We pay a discretionary bonus at yearend to all officers, including our lenders. We accrue the bonus pool all year based on our estimates of the bank’s performance. Our board’s compensation committee approves allocations for each bonus in December each year. The 10% limit on bonuses for lenders has been especially limiting for our less tenured employees who are the most productive lenders. Can you confirm that our bonus payments are subject to the 10% limit?
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Yes, we believe that these loan originator bonuses are subject to the 10% limitation, because the bonuses are pulled from a pool that is based on the bank’s estimated profits (including mortgage-related profits). The 10% limitation on loan originator bonuses is an exception to the general rule, which is that loan originators cannot receive bonuses…
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Thirty days ago, we discovered that a former loan officer sent emails from her bank email account to her personal email account (possibly related to her search for future employment with another bank). We still are sifting through hundreds of emails, but so far we know she sent herself at least one individual’s W-2 form. The loan officer quit as soon as we questioned her about the emails. We suspect that the loan officer obtained the W-2 from a loan applicant, and that the loan officer intended to steer the applicant to her new employer, but we have not been able to confirm this suspicion. Our attorney told us to notify the affected individual and any others that we discover. We are almost certain we also will file a Suspicious Activity Report (SAR). Is that something we should do? Should we also contact our primary federal regulator (the FDIC)?
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We recommend filing a SAR, but at this point, we do not (and from what you have told us, the bank does not) have enough information to determine whether a data breach has occurred that would require your bank to notify its primary regulator or any affected individuals. The SAR regulations require a bank to…