Timely Settlement of Estates; Nice Job, GPO Access!

Posted by Anthony Demangone

Now that we're living in the land of Credit CARD Act protections, I thought I'd give a small reminder concerning the new "timely settlement of estates" requirement.   This new requirement is found at 12 C.F.R. Part 226.11(c). The name can be a bit misleading.  Sure, it does involve setting up procedures to ensure that you give an administrator timely information about the credit card account of the deceased. But there's more.

Specifically, I wanted to bring this to your attention:

(3) Limitations after receipt of request from administrator. (i) Limitation on fees and increases in annual percentage rates.  After receiving a request from the administrator of an estate for the amount of the balance on a deceased consumer’s account, a card issuer must not impose any fees on the account (such as a late fee, annual fee, or overthe-limit fee) or increase any annual percentage rate, except as provided by § 226.55(b)(2).

(ii) Limitation on trailing or residual interest. A card issuer must waive or rebate any additional finance charge due to a periodic interest rate if payment in full of the balance disclosed pursuant to paragraph (c)(2) of this section is received within 30 days after disclosure.

So, with that in mind, once the administrator calls in, you have protect these accounts as noted above.  So, when assessing fees or doing APR increases on your credit card portfolio, you'll need to find a way to shield such accounts.   Also, you need to waive interest (or rebate it) if the administrator pays in full after you provide him or her with the balance as required by 12 C.F.R. 226.11(c)(2).

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GPO is wonderful.  Our Government Printing Office maintains an electronic form of the Code of Federal Regulations.  And they have already updated their Regulation Z regulations to reflect the 2/22/2010 amendments.

Comments

[Steve Van Beek]

The link that Anthony posted contains the updated language of Reg Z to reflect the July 1, 2010 requirements as well. As you work through the regulatory text, be sure to keep your antenna up as to which were required 02/22/2010 and which are required for 07/01/2010. If you need a reminder, this chart can be useful: http://nafcucomplianceblog.typepad.com/Applicability%20of%20Provisions.pdf
If the new section you are looking at is not listed - then it is a good chance it is a July 1 requirement.