Compliance Alliance Question of the Week
we have an established escrow account for a borrower on a residential mortgage
loan, upon paying of the loan, before we pay the pertinent insurance and taxes,
do we refund any excess to the borrower?
Once the loan is paid off, RESPA, § 1024.4(b)(1), requires refunding the escrow
balance to the borrower within 20 days of payoff.
Refund of escrow balance —
In general. Except as provided in paragraph (b)(2) of this section, within 20
days (excluding legal public holidays, Saturdays, and Sundays) of a borrower's
payment of a mortgage loan in full, a servicer shall return to the borrower any
amounts remaining in an escrow account that is within the servicer's control.
RESPA, § 1024.4(b)(1), https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/34/
President Biden’s repeal of the OCC’s True Lender rule affect the “Madden Fix?”
in S.J.Res.15, which the President signed into law on June 30th, Congress exercised
its power under the Congressional Review Act (“CRA”) to retroactively void the
rule submitted by the Office of the Comptroller of Currency relating to
“National Banks and Federal Savings Associations as Lenders” (85 Fed. Reg.
68742 (October 30, 2020)). The “Madden fix” was a separate rulemaking, which
was finalized in 85 FR 33530.
repeal of the true lender rule does not affect the separate “Madden fix” rules,
which have not been subject to a CRA disapproval effort. Those rules have been
challenged in court by several state attorneys general under the Administrative
a result of the new law, the true lender rule is voided retroactively. Under
the CRA, the OCC is barred from issuing any regulation in “substantially the
same form” absent express congressional authorization. The revocation does not
set a different standard for who is the true lender on a loan; it eliminates
the OCC’s bright-line standard and reverts the law to the inconsistent
court-created standards governing when a bank is acting as the “true lender.”
for congressional disapproval under chapter 8 of title 5, United States Code,
of the rule submitted by the Office of the Comptroller of Currency relating to
“National Banks and Federal Savings Associations as Lenders”.
by the Senate and House of Representatives of the United States of America in
Congress assembled, That Congress disapproves the rule submitted by the Office
of the Comptroller of Currency relating to “National Banks and Federal Savings
Associations as Lenders” (85 Fed. Reg. 68742 (October 30, 2020)), and such rule
shall have no force or effect.
— 117th Congress (2021-2022), https://www.congress.gov/bill/117th-congress/senate-joint-resolution/15/text
Interest on Loans That Are Sold, Assigned, or Otherwise Transferred [“Madden
FR 33530, https://www.federalregister.gov/documents/2020/06/02/2020-11963/permissible-interest-on-loans-that-are-sold-assigned-or-otherwise-transferred
Banks and Federal Savings Associations as Lenders [“True Lender Rule”]
Fed. Reg. 68742, https://www.federalregister.gov/documents/2020/10/30/2020-24134/national-banks-and-federal-savings-associations-as-lenders
would like to have a giveaway contest but are concerned with the requirements
under the Bank Lottery Rule. What should we consider?
the Bank Lottery Rule, with the exception of a savings raffle, any advance of
money or credit by three or more persons for the possibility to win more than
the amounts contributed generally results in a prohibited lottery. Below are
several practices that are commonly accepted to not run afoul of this
contest should be open to everyone, with no account needed to participate,
offer multiple ways to enter and mention that IRS reporting may apply. The
Official Rules should have a free alternative written entry method to enter for
non-customers is sometimes known as the "sweepstakes workaround,"
which is common for giveaways. By offering a written entry alternative, a case
can be made that there truly is no "money or credit" being advanced
to the bank since an entrant potentially can mail in their entry and still be
given a fair/equal shot at winning. While admittedly not a best practice, from
what C/A has seen, it generally appears to be considered by auditors and
regulators as compliant with both UDAAP and the anti-lottery statutes.
In addition to the free alternative method of entry, the bank should include
the following information in the official rules for that promotion, as
area and/or who is eligible to participate
date and scheduled termination date
name and address of the sponsor and promoter of the contest
of prizes, the accurate description of each prize, the retail value of each
prize and the odds of winning
all prizes offered will be awarded and how the prizes will be awarded
of selection of winners and when a determination of winners will be made
and when a list of winners can be obtained
reporting may apply
U.S.C. 1829a(a), https://www.fdic.gov/regulations/laws/rules/1000-2200.html