I don't know. Are you doing what the other poster suggested?

JGo's solution only handles the late charge issue. I wanted to know how they plan to address the "additional interest" problem.

I re-read that section in the commentary and I wonder if they mean "additional interest" as in punitive interest, not the agreed upon accruing interest. I have a call into our examiners, I'll let you know what I find out, if anything.

Good luck getting an answer from the regulators. My OCC portfolio manager can't get answers to my questions and it's less than 20 days to implementation! I appreciate the help.

We were informed that our regulators stated 4:00 was an acceptable cutoff time and Saturdays could be credited the following business day. We handled this by sending out a notice to customers the first of Sept. We included the cutoff times, must have coupon/acct # (or we have up to 5 days to credit), etc. The note for new customers will have appropriate language.

Thanks - that was what I was planning on doing too, but the interest restriction question came up. Are you backdating payments to avoid additional interest?

If we do not receive the payments in the timeslot we indicated on the customer notice, we are not backdating. i.e. if we receive payment on Friday after 4, we will post and credit on Monday even though the bank is open until 6 on Friday. Our data service center processes M-F 8-4, so since the regulations allow us to follow that time if it was legally agreed upon (our current note allows for changes if provide notice), then we feel we are in good shape. (we hope!!)

Ok, on a related note...

We have a branch that closes at 4pm and almost all of our branches close at 1pm on Saturdays. So if we set our overall cutoff time at 5pm, does that mean we have to effective date all payments that are made to a "Night Drop Box" back to the previous day? Or can we set reasonable cutoff times per branch? LIke 4pm for Branch A and 5pm for Branch B.

Also, Our branches are open until 6pm on Saturday. So how does this cutoff time work when the branches are open that extra hour on that one day?

Thanks!

**Bump**

Anyone? =)

From our understanding, if we disclose the requirements for crediting of payments (we have just added the language to note), then you can state that it can be 4:00 at one branch, or 5:00 at another. We too have branches that are open at different times on Friday. We decided to make it 4:00 for all branches to make it consistent. For any payment received after 4:00, we inform customers it will be credited the next day (as previously disclosed).

Does the new rule apply to everyone? Or is it only HELOCs and OD Line of Credit?

REG Z - 226.36(c)(1) crediting of payments applies to credit secured by a consumer's principal dwelling. This does not apply to HELOC.

But almost that same requirements will apply to all open-end credit in 07/10.

Ok, someone tell me if I got this right.

Our notes currently state nothing about payment crediting guidelines. If we send out a letter to current borrowers, and include in the notes for new loans, that payments (regardless of method/type) are subject to the same cut-offs as our deposits (payments after 2:00 PM M-F will be credited next day, Saturday payments credited Monday) - we'd be okay? How do we know if 2:00 is "reasonable".

Been wrestling with the same early cutoff monster here. Got this from a fellow banker...

Quote:

Under the October 1, 2009 Regulation Z rules, institutions may set a reasonable cut-off time for crediting loan payments. We have been asked about the reasonableness of a variety of cut-off times, some as early as 2 pm. So we ran it by the Fed and they informed us that a "reasonable" cut-off time would be 4 or 5 pm, Monday - Friday, where an institution is not substantially open for business on Saturdays. But the Fed has not budged for committing to anything less, ....

I ran the customer notification piece by our forms software provider, and here is there response. They also cited the reg and commentary for 226.26. Is notification to all current and future customers necessary?
Found the following information regarding Reg Z and the payment posting change effective 10/1/09. I’ve included the reg and commentary also.



We are not making revisions to our documents.

This pertains to one of the changes that are effective on October 1,2009. New requirements for servicing practices (no pyramiding of late charges, must credit payments as of the date of receipt, must provide loan payoff statements within a reasonable time).

Regulation Z does not require an institution to give their payments requirements in writing. Institutions MAY give the payment requirements in writing; however, if the requirements are not given in writing the regulation imposes implied guidelines.

With that being said, weis not creating any new documents or revising any existing documents at this time for this. Users may choose to add language to the additional terms area of the note, if applicable, or create an addendum to the note outside of the system.