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August 07, 2009


Rob Rutkowski

Would you agree that so long as the credit union is not in compliance with the 21 day statement requirement that the credit union cannot report the account as delinquent with the Consumer Reporting Agencies?

Anthony Demangone

Hi Rob. That is how we are reading it. In our meetings with the Fed, they seem to feel that this inability to report negative information would not go on indefinitely. At some point, a payment would be late - even if there wasn't compliance with the 21-day requirement. I expect them to spend some pages in the final rule to explain this issue in greater detail. Associated with this is the issue of collections and repossessions.

Robert F Bregler

Most of our members are paid weekly and they make their loan payments weekly. How could we ever provide them with 21 day notices?

Anthony Demangone

Hi Robert,

Your situation is not uncommon, but it does create a compliance nightmare. We have heard that credit unions in your situation are considering amending their affected loans to migrate them to a monthly due date.

Harry Metz

What would be the impact of the “skip” solution on new loans? For example, if we made a new loan under our open-end plan on September 15th; the next statement (mailed the first week of October) would have a November loan due date. This would result in the member’s first required payment being due as much as two months after loan closing. Any recommendations as to additional notification of interest accrual, payment issues, potential for default, etc?

Anthony Demangone

Hi Harry,

That is an interesting issue, but I note that there's nothing that prevents you from pushing an initial due date out that far as a federal credit union. Your credit union is state-chartered, so you'd need to see if a SC law or reg would prevent you from doing so. As for additional notification, simply stick to the required initial Reg Z disclosures. As for potential for default, pushing initial due dates out that far certainly will increase that chance at some level, but you'd have to weigh that against noncompliance with the CARD Act. Best of luck, and thanks for reading!

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