Topic: Truth in Savings Act (TISA)
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Because we are switching all of our savings accounts to new product types (without changing the account numbers), we are sending change-in-terms notices. Do we need to include our fee schedule with the account disclosures if none of the fees are changing?
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No, Regulation DD does not require you to mail a new fee schedule, provided that you alert your customers to the changed account terms. Based on your description, you are not switching customers out of their existing accounts, but rather are modifying some of the account terms. When changing account terms, you must provide notice…
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Are you aware of any limit on the use of a Visa debit card for POS transactions on a savings account, other than the Regulation D restrictions?
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Other than Regulation D’s limitation to six transfers per month (including point of sale transactions), we are not aware of any other limitations on using a debit card tied to a savings account.
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Can we advertise a savings account annual percentage yield (APY) at three decimal places? If no, and we advertise an APY rounded up to two decimal places, are we permitted to actually pay interest at the slightly lower unrounded rate?
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No, you may not advertise an APY at three decimal places. Regulation DD requires you to round the APY to two decimal places in advertisements and account disclosures. However, Regulation DD includes an exception to this general rule that will permit you to pay interest at the slightly lower rate shown in your account disclosures. …
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We are revising our TISA disclosures for tiered-rate savings accounts. Where does it state that we are required to disclose both the interest rate and APY for each tier, and where can we find the model clauses for tiered-rate accounts?
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Regulation DD requires you to disclose both the interest rate and APY for each specified balance level for tiered-rate accounts. Regulation DD also provides model clauses for tiered-rate account disclosures in Appendix B. For resources related to our guidance, please see: Regulation DD, Official Interpretations, 12 CFR 1030, Paragraph 4(b)(1)(i), Comment 3 (“Each interest rate,…
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If we acquire commercial certificate of deposit (CD) accounts from another bank, can we terminate the CDs before their maturity dates? In the alternative, can we change the interest rates before they mature?
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Regulation DD’s notice requirements will not apply, since the CDs are not held by consumers. In the absence of any regulatory requirements, you must comply with the terms of the account agreements. A number of Illinois courts have held that the relationship between a bank and its depositor is created and regulated by the contract…
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For purposes of Regulation DD’s advertising requirements, is an outdoor electronic sign that is located on the bank’s premises (but not attached to the bank) a billboard? Or is it considered to be an indoor sign?
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An outdoor electronic sign would be considered to be “outdoor media,” such as a “billboard,” under Regulation DD. It would not be considered to be an indoor sign. Regulation DD states that “indoor signs” include any signs or advertisements inside the bank premises, and the rule provides examples of computer screens, banners, preprinted posters, and…
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Can we change the way we calculate our interest rate for our CDs by sending out change-in-terms notices? We are switching from compound interest to a simple interest calculation. Our CD agreements are silent on our interest calculation method, and our initial disclosures stated that we compound interest daily.
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We believe it would be highly problematic to change from a compound to a simple interest calculation without obtaining your customers’ consent. We recommend waiting until any CD matures before unilaterally changing the interest calculation method. We note that as part of your CD account-opening disclosures, Regulation DD requires the disclosure of “the frequency with…
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What are the risks for hiring NMLS-registered mortgage loan originators who have bankruptcies or numerous collection items on their credit reports? Can we have two different standards, one for unregistered originators and another for registered originators?
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We believe that hiring a mortgage loan originator (MLO) with a bankruptcy or numerous collection items could pose some risks under the Regulation Z, which requires you to run credit checks and assess each loan originator’s financial responsibility, character, and general fitness, among other requirements. However, the degree of risk would depend on the specific…
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We are providing a bonus credit of over $10 for new checking accounts. Do we need to disclose the bonus using any special wording, and do we need to disclose that the bonus will be reported as interest to the IRS?
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Regulation DD requires you to disclose the amount of any bonus and other related information in your account opening disclosures. No special wording is required, although the following is provided in the model clauses for account disclosures: You will [be paid/receive] [$_____ (description of item)] as a bonus [when you open the account/on (date) ____].s You must maintain a…
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Is there a law requiring us to continue mailing deposit account statements after several have been returned to us as undeliverable? The phone number we have on file has been disconnected, but we are seeing continued debit card transactions on the account.
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We are not aware of any law or regulation that would require you to continue mailing periodic statements in this situation. Our recommendation is to place a freeze on the customer’s account, which should cause the customer to contact the bank, at which point you will be able to collect the customer’s updated contact information.…