Topic: Unfair, Deceptive, and Abusive Acts and Practices (UDAAP)
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Is it true that Illinois requires loan interest to be calculated on a 365/365 basis?
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There have been no Illinois laws enacted on this subject since Public Act 96-1421 (August 3, 2010). The Illinois Interest Act still states that banks may use the 365/360 method to calculate interest on commercial loans. 815 ILCS 205/4(5). (Note that it is not the prevailing industry practice to use the 365/360 method for consumer…
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How should we disclose a reclearing fee (charged when we send an item back to the payor bank a second time)?
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The Truth in Savings Act (TISA) and Regulation DD require disclosure of a reclearing fee, along with any other fee that might be imposed in connection with the account. 12 CFR 1030.4(b)(4). You should include the amount of the fee or an explanation of how the fee amount will be determined. Id. However, we note…
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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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During a compliance review we discovered a higher-priced mortgage loan that did not have an escrow account (as required by Regulation Z). What is the best way to resolve this error?
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Under the facts you gave us, we see two separate violations: (1) a violation of Regulation Z’s requirement to escrow higher-priced mortgage loans, at least for the first 365 days, and (2) a violation of the prohibition on unfair, deceptive, or abusive acts or practices in relation to consumer financial products and services. The Regulation…
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Are there any Illinois laws that govern the use of disclosures that are translated into Spanish for loan customers?
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We believe that the section of the Consumer Fraud and Deceptive Business Practices Act that you cite, Section 2N, would apply to a national bank’s use of interpreters. In one of the few cases interpreting this statute, a court applied Section 2N to a mortgage lender in residential loan transaction. Martinez v. Freedon Mortg. Team,…