Angler -
Yep, sounds about right. Our specs are set up the same way (interest first, then principal). Like you, I really don't know how to manage this. I also have a call in to ITI and am waiting for a response on how they propose we deal with this.

We will not be implementing the billing changes until the August cycle, so we have a couple of weeks to figure it out at our bank...but I know already it's not going to be fun.

We're going to have to change our HELOC billing to comply with the 21 day period. Is it necessary to send a notice to the customers explaining this? I don't know if the reulations require this or not.

Is anyone else having trouble grasping the practical aspect in those states that require 10 days after the due date before assessing a late charge that the charge won't show until the next statement.

For example, the statement cycles the first day of September. If we use 3 days to send the statement, an additional 21 for the new requirement plus 10 days for state law we won't even be able to disclose the late charge until the November statement since the payment was not late (3+21+10=34) until after the October has been sent.

We have a overdraft line of credit. The statement date is the checking account cycle and the payment is due 15 days from the cycle. The payment is auto deducted and there is no late fee charnged. Would we have to comply with the 21 day notice?

This thread is getting very long. Yes, this has been brought up several times. There isn't much you can do about it except train your staff on how to respond to questions.

I have the same issue. You have to comply if you charge a late fee, a penalty APR or report the customer as delinquent to a credit bureau. We don't charge a late fee or apply a penalty APR; however, we do report to the credit bureau. As a result, we will be changing our paramenters to take the automatic payment 25 days from the statement date. This will keep us in compliance with the 21 day rule.

We are changing all of our HELOC due dates - is a notice in their statement sufficient or do we have to redisclose? Also, if a customer's payment is on autodraft, am I right in thinking that the draft authorization obligates the borrower to pay on a certain date so that if the draft date is the 15th instead of the 26th, we are non-compliant?

Another question: Our bank currently charges a late fee after 10 days, but is considering shortening it to 5 days. If we do, we would notify the customers, but does Reg Z actually require an advance notice for this specific change? If so, where would the requirement be found?

"Our bank currently charges a late fee after 10 days, but is considering shortening it to 5 days. "

I would be surprised if your State law (Georgia) would allow this - but you never know. Most States limit late fees on consumer loans to a 10 to 15 day grace period.

The disclosure of late fees and how they are calculated is required under 226.6(b). Any change to required disclosures under 226.6 require a subsequent disclosure - see 226.9.

Do I understand this correct: for our overdraft line of credit we do not charge late fees, increase APR, but we do report delinquent. Since we report, we would need to comply with the 21 day notice.

Has anyone encountered that payments may not actually show up until the following statement?

This follow-up question relates to the "shortening of the late fee period" question that I posted earlier (possibly shortening it from 10 days to 5 days and whether advance notice for that change would be required ).

I looked at the 226.9 subsequent disclosure requirements. I noticed that in the change in terms section, 226.9(c)(2) says "No notice under this section is required when the change involves late payment charges..."

Would this be an exception to the written notice requirements that would enable the bank to avoid having to send a complete new set of disclosures?

If we are only changing the date we print and mail statements, do we need to give the customers any kind of notice (short statement cycle, change in terms, etc)?

Thanks

If our members only have an open end loan (auto loans and unsecured lines of credit)and no checking or savings accounts, they only receive a statement quarterly. They still make payments each month and we still charge late fees if applicable but they don't get "periodic statements". So, the big question is can we still charge late fees on the months they don't get a statement mailed?

I also have a question on our credit cards. We have a grace period of 15 days where if the member pays the amount in full the interest doesn't accrue during the grace period. But if there is a beginning balance and there will be a balance even after making a payment, the interest does accrue during the grace period. Is this ok and is it no longer a grace period but rather it is a courtesy period? If it is a true grace period - does section 163 require us to increase our grace period on credit cards from 15 days to 21 days?
Sorry for asking so many questions in one post
Thanks

After much discussion at our bank, we have elected to do a statement message on the billing statements for our HELOC's. We used to bill on the 31st, but beginning this month we'll be billing on the 25th. Our statement message indicates that we are providing them with their billing statement earlier to assist them in budgeting for their upcoming payment.

Ditto, but we couldn't make the statement drop deadline so we're following the mailed statements with separate notice mailing. We're not changing payment due dates on any account....just adopting an earlier drop date. We're looking at 25 days prior to payment due date because our statements are placed in the mail day following production. We're worried that if the statements drop on Friday, it will be Monday before the statements are actually placed in the mail (or Tuesday, if Monday is a legal holiday!!).

There is no requirement to send a new complete set of disclosures for a change in terms. You are also correct in that it appears that it would be exempt from disclosure under Regulation Z. It would still be a contractual change and under State law it may require notification depending on how your contract reads. In the current regulatory environment I would error on the side of caution. You could find yourself in a UDAP lawsuit.

We will drop HELCO statements on the first day of the month with a due date of the 25th. Can a customer request the setup of an automatic draft from their DDA account before the due date of the 25th. I myself want to pay that payment on the date I receive my paycheck.

"Can a customer request the setup of an automatic draft from their DDA account before the due date of the 25th."

They can setup it up on any day on which you will allow and can accommodate.

I didn't receive any responses so I just wants to make sure we are ok to continue providing the open end periodic statments (not credit cards but other types of open end loans) on a quarterly basis only and still be able to charge a late fee if needed on the months when they don't receive a statement?

I guess I am confused as to why the automatic payments are an issue. They can have them drafted any day they want. We just wouldn't be able to charge a late fee if our statement wasn't produced at least 21 days before the due date. Am I missing something?

You have to provide a statement 21 days prior to any payment being due for which you will charge a late fee.

river girl - how have you been complying with the 14 day rule that is the current rule all this time?

We've changed the drop date to meet the new 21 day requirement. Can someone clarify if we need to make changes to our grace period that is currently set at 16 days?

So here is how we are set up. I am guessing we will have to change our billing cycle but some are thinking we won't. I would like your opinion's if you wouldn't mind. Interest is charged during the grace period. Thanks!

OD protections are billed to the end of the late fee grace period, the customer has 31 days (15 day bill lead time, plus 16 days before a late fee is charged).

Our Home Equity loans have a 15 day bill lead day and a 10 day grace period, for a total of 25 days.

Good question.
Not only do we only send quarterly but our members can choose their due date when opening the loan so lots of loans have due dates between the 1st and the 14th of the month. So even if we sent stmts each month, they shouldn't - in reg land - be charged a late fee since they don't get a 14 day notice. Correct?