Banking Regulations and Financial Terminology Review

A comprehensive set of vocabulary flashcards covering banking laws, federal regulations (B through Z), and financial compliance terminology found in the lecture notes.

Adjustable Rate Mortgage (ARM)

A loan that has a variable rate that can go up after consummation, is secured by the consumer's principal dwelling, and has a term of greater than $1$ year.

Adverse Action

A refusal to grant credit on substantially the same terms requested by the applicant, unless a counteroffer is made by the creditor and the applicant accepts within $90$ days.

Adverse Action Notice

A written notice informing loan applicants that their loan has been denied, which must be provided within $30$ days of receiving a completed application for consumer credit.

Annual Percentage Rate (APR)

A loan’s cost expressed as an annualized percentage rate, reflecting interest and other finance charges.

Annual Percentage Yield (APY)

A percentage rate reflecting the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a $365$-day period.

Average Prime Offer Rate (APOR)

A survey-based estimate of market rates for the lowest-risk prime mortgages used to determine if a loan falls into the Higher-Priced Mortgage Loan (HPML) category.

B Notice

A notice from the IRS informing a bank that a customer has not provided a correct taxpayer identification number (TIN).

Business Day (General)

A day on which the creditor's offices are open to the public for carrying on substantially all of its business functions.

Business Day (Rescission/TRID)

All days except Sundays and legal public holidays specified in $5$ U.S.C. $6103(a)$.

Changed Circumstance

An extraordinary event beyond the control of any interested party or an unexpected event specific to the consumer or transaction that was inaccurate or changed after disclosures were provided.

Closed-End Credit

All consumer credit other than Open-end Credit.

Closing Disclosure (CD)

A TILA-RESPA Integrated Disclosure (TRID) that provides information on the final costs of the mortgage transaction.

Consumer Credit

Credit offered or extended to a natural person or covered trust for personal, family, or household purposes.

Consumer Lease

A lease covering personal property made to an individual for personal, family, or household purposes.

Consumer Report

Any communication by a consumer reporting agency bearing on a consumer’s creditworthiness, character, or general reputation.

Investment Test

A Community Reinvestment Act (CRA) evaluation of a bank's record of meeting community credit needs through qualified investments.

Lending Test

A Community Reinvestment Act (CRA) evaluation of a bank’s home mortgage, small-business, small farm, and community development lending.

Service Test

An analysis under the Community Reinvestment Act of the availability and innovativeness of a bank’s systems for delivering retail banking products.

Credit Score

A numerical value or categorization derived from modeling used to predict the likelihood of certain credit behaviors.

Currency Transaction Report (CTR)

A report required by the Bank Secrecy Act for all currency transactions in excess of $10,000$ in one business day.

CTR Filing Deadline

CTRs must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) within $15$ days of the transaction date.

Customer

Any consumer who has a continuing relationship with the bank.

Debt Collector

A person or entity whose principal business purpose is to collect debts owed to others.

Electronic Fund Transfer (EFT)

A transfer of funds initiated through an electronic terminal, telephone, computer, or magnetic tape to authorize a financial institution to debit or credit a consumer deposit account.

Higher-Priced Mortgage Loans (HPML)

A closed-end consumer credit transaction secured by a principal dwelling where the APR exceeds the APOR by a certain percentage.

Insider

An executive officer, director, principal shareholder, or related interest of the bank or its holding company.

Loan Application Register (LAR)

Data produced by lenders required by the Home Mortgage Disclosure Act (HMDA) containing information on dwelling-secured loans.

Loan Estimate (LE)

A TRID disclosure providing information on key features, costs, and risks of the mortgage loan for which the consumer is applying.

Margin Stock

Equities traded on an exchange such as the NYSE or NASDAQ.

Marketing Service Agreements

Agreements between mortgage service providers (lenders, agents, brokers) focused on marketing-related services for mortgage loans.

Metropolitan Statistical Area (MSA)

An urban area with a population of at least $50,000$ and a total metropolitan area population of at least $100,000$.

Mortgage Loan Originator (MLO)

A person who takes a consumer residential mortgage loan application and offers or negotiates terms for compensation.

Office of Foreign Asset Control (OFAC)

A U.S. Treasury Department agency that executes economic and trade sanctions in support of national security.

Open-End Credit

A plan where repeated transactions are contemplated, finance charges are imposed on unpaid balances, and credit is available up to a limit.

Politically Exposed Persons (PEPs)

Senior judicial or non-elected administrative officials of a foreign government, or their certain family members.

Principal Shareholder

Anyone who owns, controls, or has the power to vote more than $10$ percent of the bank’s stock.

Prohibited Basis (ECOA)

Race, color, national origin, religion, gender, age, marital status, receipt of public assistance, or exercise of rights under the Consumer Credit Protection Act.

Purpose Credit

A loan extended for the purpose of purchasing or carrying margin stock.

Red Flags

Patterns or specific activities that indicate the possible existence of identity theft.

Regulation B

The CFPB regulation that implements the Equal Credit Opportunity Act (ECOA).

Regulation BB

The Federal Reserve’s regulation that implements the Community Reinvestment Act (CRA).

Regulation C

The CFPB’s implementing regulation for the Home Mortgage Disclosure Act (HMDA).

Regulation CC

Implements the Expedited Funds Availability Act (EFAA) regarding hold periods on demand deposits.

Regulation D

Implements the Federal Reserve Act requirement that banks maintain reserves on certain deposits.

Regulation DD

The CFPB regulation that implements the Truth in Savings Act (TISA).

Regulation E

The CFPB’s implementing regulation for the Electronic Fund Transfer Act (EFTA).

Regulation FF

Implements the Obtaining and Using Medical Information in Connection with Credit Act.

Regulation G

Implements the S.A.F.E. Mortgage Licensing Act regarding federal registration of residential mortgage loan originators.

Regulation GG

Implements the Prohibition on Funding of Unlawful Internet Gambling.

Regulation M

The Federal Reserve Board regulation that implements the Consumer Leasing Act.

Regulation O

Implements the portion of the Financial Institutions Regulatory Act governing lending by banks to insiders.

Regulation P

Implements the Gramm-Leach-Bliley Act governing the treatment of nonpublic information about consumers.

Regulation R

A regulation by the SEC and Federal Reserve defining the scope of securities agency activities banks may conduct without broker registration.

Regulation U

Implements the Securities Exchange Act of $1934$ regarding margin limits and securities credit by banks.

Regulation V

The CFPB regulation that implements the Fair Credit Reporting Act (FCRA).

Regulation W

A regulation that places guidelines on transactions between depository institutions and their affiliates.

Regulation X

The CFPB regulation that implements the Real Estate Settlement Procedures Act (RESPA).

Regulation Z

The CFPB regulation that implements the Truth in Lending Act (TILA).

Risk Based Pricing Notice

A notice provided to a consumer when credit terms are materially less favorable than those granted to others based on a consumer report.

Special Flood Hazard Areas (SFHA)

An area deemed by FEMA to have a high risk of flooding.

Telephone Consumer Protection Act (TCPA)

Law restricting telemarketing and the use of automated telephone equipment, falling under FCC authority.

Transaction Account

A demand deposit account (DDA), NOW account, or shared draft account as described in Regulation D.

TRID

Acronym for the TILA-RESPA Integrated Disclosures rule mandated by the Dodd-Frank Act.

Time Account

An account where funds cannot be withdrawn for at least $6$ days after deposit without an early withdrawal penalty.

Non-affiliated Third Parties

A third-party entity that is not under common control; control means ownership or power to vote $25$ percent of voting shares.

Ability to Repay (ATR)

The requirement to make a reasonable good faith determination that a consumer can repay a dwelling-secured closed-end loan.

Abusive Act or Practice

An act that materially interferes with a consumer’s ability to understand a product or takes advantage of their lack of understanding.

Access Device

A card, code, or other means used by a consumer to initiate electronic fund transfers.

Address Discrepancy

A red flag occurring when an address change is followed within $30$ days by a request for a new debit or credit card.

Affiliate

A company that controls, is controlled by, or is under common control ($25$ percent ownership/vote power) with another company.

Affiliated Business Arrangement

A situation where bank personnel refer a settlement service to a provider where the referring party owns $1$ percent or more of the provider.

Amount Financed

The principal loan amount minus downpayment plus non-finance charges minus prepaid finance charges.

Bank Secrecy Act (BSA)

A $1970$ act requiring financial institutions to assist government agencies in curbing financial crimes through recordkeeping.

Banking Day

The part of any business day on which a bank is open to the public for substantially all banking functions.

Beneficial Owner Rules

Requirement for banks to collect and verify information of the real people who own or control companies opening accounts.

Bonus

A gift or award worth more than $10$ given to a consumer for opening or maintaining an account balance.

Case-by-Case Hold

A delay in item availability only to the limitation prescribed by Regulation CC.

Change in Terms Notice (Reg E)

Notice required at least $21$ days before the effective date if a fee is increased or an adverse change is made.

Change in Terms Notice (Truth in Savings)

Notice required at least $30$ days before a change that adversely affects the APY.

Charge Card

A credit card account where no periodic rate is used to compute a finance charge.

CHARM Booklet

The Consumer Handbook on Adjustable Rate Mortgages required at the time of application.

Chattel Dwelling Loan

A loan secured by a dwelling (like a mobile home) but not the underlying real property.

Check 21

The Check Clearing for the 21st Century Act, enabling fast electronic check processing.

Consummation

The time a consumer becomes contractually obligated on a credit transaction; also called closing.

Credit Sale

A sale in which the seller is a creditor, such as a bank lending on previously foreclosed real estate.

Customer Due Diligence (CDD)

A pillar of BSA compliance enabling banks to predict transaction types and assess suspicious activity risk.

Disparate Impact

Evidence of a uniform neutral policy having a disproportionately adverse impact on a protected group.

Disparate Treatment

Evidence that a lender intentionally treated similarly situated persons differently on a prohibited basis.

Dual Tracking

The practice of simultaneously pursuing loss mitigation and foreclosure.

Early Intervention (RESPA)

Requirement to contact delinquent borrowers within $36$ days and provide written notice within $45$ days.

Error Resolution (Regulation E)

Processes followed when a consumer alleges a disputed transaction; all disputed transactions are considered unauthorized until proven otherwise.

Escrow Account Deficiency

Occurs when the current escrow balance falls below zero.

Escrow Account Shortage

Occurs when the current escrow balance is lower than the target balance allowed under RESPA rules.

Escrow Account Surplus

Occurs when the escrow balance exceeds the allowable cushion at the time of analysis.

Fair Debt Collection Practices Act (FDCPA)

Establishes legal protections from abusive debt collection practices.

Fed Box

Disclosures that must be segregated from others on a closed-end disclosure form.

Flood Disaster Protection Act (FDPA)

$1973$ act mandating flood insurance for loans in high-risk zones (SFHAs).

HOEPA Loans

High-cost mortgage loans or lines of credit subject to specific protections under Section $32$ of Regulation Z.

Home Equity Line of Credit (HELOC)

An open-end line of credit secured by the consumer’s dwelling.

MIRE

Acronym for Make, Increase, Renew, or Extend; triggering events for flood insurance determinations.