I have a potential customer whose line of business is loan payment acceleration.
He has agreements with his customers, who are consumers, to debit their account bi-weekly, then make their monthly mortgage payment. He debits them via an ACH file and sends either an ACH credit or a check to pay the individual’s mortgage. For this service he takes a small fee for each transaction.
At first I thought “third party payment processor” but that doesn’t quite seem to fit. Then I thought money transmitter, but now I’m thinking I should stop thinking!
Any thoughts on where this potential customer fits in the BSA scheme of things?
Thanks.

Wait-

So he makes payments on behalf of people who are perfectly able to pay?

He isn't doig credit consolidation or anythin like that, merely being paid a small fee to pay a mortgage for consumers...

I would call him a professional service provider and label him high risk. I would want to know more about who he does business with as much as you can find out. I would also watch the ACH files and monitor returns, rejections and unauthorized as they come in.

Very peculiar.

I'm not so sure we would open an account for this type of business. It seems ripe for consumer complaints -- just like loan modification scams.

I would do extra due dilegence on the company and the owner.

This does seem very peculiar. Why would anyone pay a fee for this when they could easily set that up with their mortgage company or use one of their own personal accounts for this same type of transfer/transaction?

This is actually the second company that's wanted to open an account with us that does this sort of activity. We didn't spend a lot of time analyzing the first one because we couldn't support the technological needs of the company.

I've already obtained the documents they use and have a laundry list of questions that the account officer needs to get answered.

They debit their customers account bi-weekly for 1/2 of the mortgage payment. At the end of the year, they've made 13 payments instead of 12, resulting in a faster reduction in principal balance.

I read through the agreement he has his customers sign. One of the paragraphs specifically says that this is something they could do themselves from their own accounts. People sign up for this because they don't have the discipline to do it themselves.

We have been approached by these types of customers as well and have turned them away. Like I said, businesses like this are ripe for consumer complaints. I like to think that I am saving my bank from having to respond to a subpoena in the future.

Did you do a Google search on them with "scam" or "complaint" to see if you could find any complaints about them? Did you check with the BBB?