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FDIC Most Frequently Cited Violations

The FDIC Consumer Compliance Highlights for March 2022 summarized most frequently cited violations cited by FDIC consumer compliance examiners during 2021.

Unfortunately, most frequently cited violations (representing approximately 78 percent of the total violations cited in 2021) remain exactly the same as 2020 and involve the Truth in Lending Act (TILA), Flood Disaster Protection Act (FDPA), Electronic Fund Transfers Act (EFTA), Truth in Savings Act (TISA), and the Real Estate Settlement Procedures Act (RESPA).

These most frequently cited violations generally involve regulations that represent the greatest potential for consumer harm. For example, TILA requires disclosures about mortgage costs and calculation errors could result in reimbursements to consumers; the flood insurance provisions of the FDPA could result in penalties if the supervised institution does not take appropriate steps to ensure compliance. Given the heightened risk for potential consumer harm, these five areas continue to represent a center of focus for consumer compliance examiners.

Of the top regulatory areas cited for violations, the following list describes the most frequently cited violation in each area:

  • TILA: Section 1026.19(e) of Regulation Z, which implements TILA, requires the lender to provide a loan estimate with the information required under section 1026.37. This section provides for timing requirements of the loan estimate and requirements for the disclosure of certain settlement providers. This section also includes requirements for pre-disclosure activity, the good faith determination for estimates of closing costs, and the provision and receipt of revised disclosure.

  • FDPA: Section 339.3(a) of Part 339 of the FDIC Rules and Regulations, which implements the FDPA, requires adequate food insurance be in place at the time a covered loan is made, increased, extended, or renewed.

  • EFTA: Section 1005.11(c) of Regulation E, which implements the EFTA, requires a financial institution to investigate allegations of electronic fund transfer errors, determine whether an error occurred, report the results to the consumer, and correct the error within certain timeframes.

  • RESPA: Section 1024.37(c) of Regulation X, which implements RESPA, prohibits a loan servicer from assessing the borrower any premium charge or fee related to force-placed hazard insurance until certain disclosure requirements have been met. The disclosures must comply with formatting requirements set forth in this section.

  • TISA: Sections 1030.4(a) and (b) of Regulation DD, which implements TISA, set forth timing and content requirements for deposit account disclosures.

Now may be a good time for a quick “look see” to ensure your regulatory house is in order in these areas. More detailed information is presented in the referenced FDIC March 2022 document.