http\\.www.ct.gov
State of Connecticut Department of Banking
State Consumer Credit
Examination Issues
Paul Ligas
Principal Financial Examiner
http\\.www.ct.gov
State of Connecticut Department of Banking
Questions ?
http\\.www.state.ct.us\dob
State of Connecticut Department of Banking
STATE RESPONSIBILITIES
• Responsible for Truth-In-Lending - Reg Z
• Examinations for all State Chartered
Financial Institutions
• Expanded to address Real Estate
Settlement Procedures Act - Reg X
• Last year conducted examinations at 12
Banks and 15 Credit Unions
• State TILA ratings reflect the efforts of
management in meeting state regulatory
requirements.
http\\.www.ct.gov
State of Connecticut Department of Banking
THE YEAR IN REVIEW
• Especially the compliance and loan
origination teams
• Most often assigned ratings are in the
“strong” and “generally strong” area.
http\\.www.ct.gov
State of Connecticut Department of Banking
THE YEAR IN REVIEW
• Ratings definitions are derived from the
Compliance Examination.
http\\.www.ct.gov
State of Connecticut Department of Banking
AREAS OF FINDINGS
ARM Calculation Stream
No longer valid due to changes in TIL. New
form requires that the stream is calculated
for the first five years and then must
disclose maximum possible amount per
loan documentation.
http\\.www.ct.gov
State of Connecticut Department of Banking
AREAS OF FINDINGS
Rescission Time Periods
Borrowers continue to date both parts of the
rescission form as of the closing date. This
should be caught by robust post closing
packet review. Remember that this will
leave you open to a possible 3 year
rescission period and in the worst case
allow the borrower to have an interest free
unsecured note for the three year period.
http\\.www.ct.gov
State of Connecticut Department of Banking
AREAS OF FINDINGS
Rate Change Notices
Occasionally, the rate change notices contain
errors and do not reflect the proper rate as
permitted under the actual loan
documentation.
http\\.www.ct.gov
State of Connecticut Department of Banking
AREAS OF FINDINGS
RESPA issues
There continue to be problems with GFEs and
HUD1/1A’s in the area of “no cost” fixed second
mortgage products. Issues are caused when bank
overestimates the reimbursement costs and then
changes them on the Final HUD1/1A. This leads
to a change in the amount of the reimbursement to
the borrower which can not be reduced at time of
closing. Changes require new documentation and
if three day period is not available than borrower
has option to waive the period but should be in
writing and not on a form letter.
http\\.www.ct.gov
State of Connecticut Department of Banking
2012 EXAMINATION FOCUS
Since the CFPB has not yet determined the
new forms yet we will be going back to
basics. Risk-based examinations will
follow most of the old procedures.
Advertising:
• Electronic (Web page)
• Print media
http\\.www.ct.gov
State of Connecticut Department of Banking
2012 EXAMINATION FOCUS
Rate Change Letters
Form Reviews
• First and second mortgage
• HELOC
• Loan disclosures
First mortgage loans
Refinance and purchase mortgage
http\\.www.ct.gov
State of Connecticut Department of Banking
2012 EXAMINATION FOCUS
Construction-to-permanent mortgage
Second fixed mortgage loans
No cost versus cost
http\\.www.ct.gov
State of Connecticut Department of Banking
2012 EXAMINATION FOCUS
GFE /HUD1/1A consideration for changes
HELOCs
http\\.www.ct.gov
State of Connecticut Department of Banking
2012 EXAMINATION FOCUS
Other Consumer Lending
• Automobile: new and used
• Personal: Secured versus unsecured
• Personal lines of credit
• Overdraft lines of credit
TILA audits in years between examinations
Compliance Committee minutes
http\\.www.ct.gov
State of Connecticut Department of Banking
2012 EXAMINATION FOCUS
Compliance training for individuals
Advertising Book
http\\.www.ct.gov
State of Connecticut Department of Banking
2012 EXAMINATION FOCUS
Web page compliance verification notes
when available
Review at web page
Exit meeting(s) with management
• Area supervisors
• Management selected participants
http\\.www.ct.gov
State of Connecticut Department of Banking
EXAMINATION PROCESS
http\\.www.ct.gov
State of Connecticut Department of Banking
EXAMINATION PROCESS
Wherever necessary:
• Credit Card review
• Reverse Mortgage loans
• Personnel Educational Loans
EXAMINATION PROCESS
How can we improve it?
http\\.www.ct.gov
State of Connecticut Department of Banking
First Day Letter
How can we simplify it?
Confusion areas?
AGENCY CONTACTS
james.clarke@ct.gov
erin.sullivan@ct.gov
http\\.www.ct.gov
State of Connecticut Department of Banking
Bank Relationship Contact
Department Manager
todd.prout@ct.gov
Examiner
paul.ligas@ct.gov
Credit Union Relationship Contact
rita.redler@ct.gov
http\\.www.ct.gov
State of Connecticut Department of Banking
AGENCY CONTACTS
Department Manager
debra.lein@ct.gov