The old adage "What you don't know can hurt you" holds true, even in the compliance context. Failure to get it right when it comes to Reg Z coverage, including the overall reg itself, as well as the variations in coverage triggers and exemptions for particular provisions within the reg, can cost your institution time and money.
There are dangers in over-complying. If you think it's a good idea to go ahead and use Reg Z disclosures on loans that are not subject to Reg Z, we will explain why it's not. If you think there is no harm in treating an application/loan as covered by Reg Z when it really isn't, we will sketch out repercussions to consider that will put the harm in perspective.
When you aren't sure whether a loan is subject to Regulation Z, it may seem like a good idea to take the "safe" choice and just provide the disclosures. That may have been the better choice in the past, but having a true understanding of what "consumer credit" comprises will serve your bank better, because the "conservative" approach of disclosing when in doubt is not the optimal choice for the bank's bottom line.
Assuming any loan secured by rental property is a business loan can have disastrous consequences. Conversely, if you wrongly regard certain types of rental property-related loan apps as being subject to Regulation Z, you will jump through hoops there is no need to jump through.
To avoid over-compliance, you need to know:
- How the "primary" purpose test works
- What is business credit
- What is commercial credit
- What is agricultural credit
- What is organizational credit
- What exemptions exist from each of the different sets of requirements under Reg Z
- The three factors to look at when rental property is involved
- How to tell if a trust as an applicant is exempt
- The different scopes of coverage for different parts of Reg Z
And much more!
This program will make you a Reg Z coverage master!
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