Under today’s rules, credit extended to anything other than a natural person is exempt from Regulation Z requirements. However, on August 1, 2015, a key change will go into effect. This change, found in the Commentary to 1026.3(a), will make credit extended to certain types of trusts subject to Regulation Z. Specifically, Regulation Z will apply to any consumer-purpose credit extended to a trust that was created for tax or estate planning purposes. The exemption for “organizational credit” still applies and continues to exempt credit extended to corporations, partnerships, and other associations or entities.
Although this change might not affect a large volume of your loans, you need to ensure compliance when extending a loan to an applicable trust. The good thing is that if want to take a conservative approach, you can over-disclose.
Again, this coverage change applies to any application received on or after August 1, 2015.
Diane joined Banker’s Compliance Consulting with over 10 years of compliance experience and over 15 years of experience within the financial industry. Diane is a Certified Regulatory Compliance Manager (CRCM) and has a Bachelor’s Degree in Sociology with a concentration in Criminal Justice. She is a graduate of the Schools of Banking Compliance School and has participated in various other training opportunities throughout her career. Diane understands firsthand the struggles banks face in building and maintaining successful compliance programs. Her experience and common sense approach to consumer compliance is a great asset to our clients.
Diane and her husband have two kids who keep them busy. She enjoys running and other sports and is a big Bugs Bunny fan! She’s a bit crazy in that she does enjoy reading some of these regulations and she’s a “crazy cat lady!” Her cat tales are hilarious!