By Brad Washburn CRCM, CAMS​

The Protecting Tenants at Foreclosure Act of 2009 (PTFA), which expired on Dec. 31, 2014, contained protections intended to ensure that tenants facing eviction from a foreclosed property would have adequate time to find alternative housing.  The financial regulatory reform bill titled the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) which was enacted May 24, 2018, in part, restores the PTFA.  Specifically, Section 304 of the Act repeals the previous sunset provision which effectively changes the PTFA into a permanent law. 
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The restoration of the PTFA was effective on June 23, 2018.  As such, a Bank should take steps to ensure it has policies and procedures in place to comply with the provisions PTFA.  In addition, the Bank should monitor communications from its primary federal regulator for guidance and updates in examination materials regarding the PTFA to ensure future compliance.    

By: James Moore, CRCM
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​As a reminder, the Regulation CC rule changes are effective July 1, 2018.  The bulk of the changes are to Subpart C and are a much-needed update by the Federal Reserve to acknowledge that the check collection process is virtually electronic.  There are no changes to the regulation’s availability schedules or disclosure requirements as the rule does not affect Subpart B. 

The rule extends coverage of Subpart C to electronic items and contains a new incentive for banks to process returned items electronically. The Federal Reserve believes this new expeditious return rule will incentivize depository banks to receive electronic returns to preserve their ability to make claims that certain checks were not returned expeditiously.  The rule amends the two-day test time frame to expire at 2:00 p.m. of the second business day (previously 4:00 p.m.) and increases the threshold for notice of nonpayment to $5,000 (previously $2,500).
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The rule provides much needed clarity for instances where a check is deposited in both paper and electronic form.  A depository institution should pay close attention to the new rule even when it does not have a mobile or remote deposit capture service for its customers as there is potential liability for accepting a check that has already been deposited at another institution through a mobile deposit.  A depositary bank that receives a paper check is indemnified against loss if the check was previously paid through a remote deposit capture service or mobile deposit platform unless there is a restrictive endorsement, such as “for mobile deposit only.”  

Tellers and front-line staff should be aware of the restrictive endorsement requirement to ensure paper items deposited do not include the restrictive language.  Each check received for deposit should be reviewed to ensure the “for mobile deposit only” box is not checked.  A financial institution will lose its protection if it takes an item for deposit with the restrictive endorsement.  It is recommended that periodic internal audits are conducted of deposited checks at the teller line on an ongoing basis to ensure checks were not deposited with the restrictive endorsement. 
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In addition, institutions offering mobile deposit or remote deposit capture should ensure agreements have been updated to include the restrictive endorsement at the time of deposit.  Internal audits of deposit activity from mobile deposit and remote deposit capture customers should be conducted on a regular basis to ensure the restrictive endorsement is made as required.  Some institutions will be conducting these internal audits at random or at a specific dollar threshold.         

By: Brian Taylor

As interest rates slowly climb back to pre-2008 levels, financial institutions are encouraged to evaluate the effects of a rising rate environment on deposit compliance. Specifically, banks should assess how rising interest rates impact their Regulation E error resolution procedures.

When a customer disputes a fraudulent transaction, the bank provisionally credits the customer’s account for the amount the customer claims is fraudulent. Following regulatory guidelines, the bank has 10 business days from the date the customer notifies the bank of the allegedly fraudulent transaction to either provisionally credit the customer’s account or issue final credit. Now, let’s suppose the account in question is an interest-bearing account. According to Section 1005.11(c)(2)(i), the provisional or final credit amount should include interest that would have been accrued. In recent years, the low rate environment has rendered any interest earned too small to calculate, even for institutions that wait the full 10 business days to provide credit.
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However, as interest rates trend upward, institutions need to pay attention to interest calculations for error disputes, especially for large dollar disputes. The intent of the regulation is to make the customer whole after the fraudulent activity has occurred. For customers with interest-bearing accounts, banks must return not only the amount disputed but interest that would have been earned as well.