Topic: Retail Lending
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When does a borrower have to sign an identification statement for payday loans?
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The borrower identification statement requirements apply to payday loans with terms of 91 days or fewer (and in which the amount financed does not exceed $2,000). 32 CFR 232.3(b)(1)(i). The bank should provide the “covered borrower identification statement” to each applicant “[p]rior to becoming obligated on the transaction.” 32 CFR 232.5(a)(1). And, a covered borrower…
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Does Illinois set a 40% maximum for the APR on consumer loans?
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Under Illinois law, there are very few limitations on interest charges that apply to banks. Section 5e of the Banking Act states that “[n]otwithstanding the provisions of any other law in connection with extensions of credit” banks may charge any “interest, fees, and other charges . . . subject only to the provisions of [subsection…
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When we do small consumer loans, the APR can be very high. Could a high APR violate an Illinois usury limit?
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Under Illinois law, there are very few limitations on interest charges that apply to banks. Section 5e of the Banking Act states that “[n]otwithstanding the provisions of any other law in connection with extensions of credit” banks may charge any “interest, fees, and other charges . . . subject only to the provisions of [subsection…
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Can we charge a fee for a very short term (45–60 day) bridge loan? Or could we waive some of the fees that we would charge on a normal mortgage loan?
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We do not believe that any laws or regulations would prevent you from charging the same fees and penalties on a bridge loan as you could charge on a longer-term loan. In our view, the general rule in the Illinois Banking Act, that banks may charge any fees “subject only to the provisions of [Subsection…
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Do you know why we got a warning from our loan software stating that we cannot charge a dishonored item fee on consumer loans?
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We do not believe that there are any restrictions on charging fees for a loan secured by a mortgage on real estate, provided that the customer contracted to pay such fees in your loan agreement. Section 4(1) of the Illinois Interest Act states that “it is lawful to charge, contract for, and receive any rate…
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Do you see any compliance problems with a short-term consumer loan secured by farm land?
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The loan you described may involve some risk of UDAAP or fair lending violations, but there are no specific federal or Illinois prohibitions of a consumer short-term balloon loan secured by real property that is not the consumer’s dwelling.[1] As you pointed out, Regulation Z’s restrictions on balloon loans would not apply to this loan,…
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Does Illinois have any usury laws as to consumer loans that would apply to national banks?
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Late Fees on Loans We do not believe that there are any restrictions on interest rates for consumer (or other) loans, provided that the customer contracted to pay such fees in your loan agreement. Section 5e of the Banking Act states that “[n]otwithstanding the provisions of any other law in connection with extensions of credit”…
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If we request an applicant’s credit score for a consumer loan, and the score is “N/A”, how do we handle listing the four key factors in the adverse action disclosure?
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You are not required to disclose the applicant’s credit score because the applicant does not have a credit score (unless your institution used information from the report to create its own credit score for the applicant). Dodd-Frank amended the Fair Credit Reporting Act (FCRA) to require creditors to include additional information in adverse action disclosures…
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Is there a cap on the late fees that we can charge on consumer loans (residential and non-residential, such as auto loans)?
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Late Fees on Loans We do not believe that there are any restrictions on charging fees for a loan secured by a mortgage on real estate or on consumer loans, provided that the customer contracted to pay such fees in your loan agreement. As stated in the Illinois Interest Act, a bank is authorized “to…