§ 1041.12 - Compliance program and record retention.

§ 1041.12 Compliance program and record retention.

Cross Reference

Link to an amendment published at 85 FR 44444, July 22, 2020.

(a) Compliance program. A lender making a covered loan must develop and follow written policies and procedures that are reasonably designed to ensure compliance with the requirements in this part. These written policies and procedures must be appropriate to the size and complexity of the lender and its affiliates, and the nature and scope of the covered loan lending activities of the lender and its affiliates.

(b) Record retention. A lender must retain evidence of compliance with this part for 36 months after the date on which a covered loan ceases to be an outstanding loan.

(1) Retention of loan agreement and documentation obtained in connection with originating a covered short-term or covered longer-term balloon-payment loanfor covered loans. To comply with the requirements in this paragraph (b), a lender must retain or be able to reproduce an image of the loan agreement and documentation obtained in connection with a covered short-term or covered longer-term balloon-payment loan, including the following documentation, as applicable:

(i) Consumer report from an information system that has been registered for 180 days or more pursuant to § 1041.11(c)(2) or is registered with the Bureau pursuant to § 1041.11(d)(2);

(ii) Verification evidence, as described in § 1041.5(c)(2)(ii); and

(iii) Written statement obtained from the consumer, as described in § 1041.5(c)(2)(i).

(2) Electronic records in tabular format regarding origination calculations and determinations for a covered short-term or covered longer-term balloon-payment loan under § 1041.5. To comply with the requirements in this paragraph (b), a lender must retain electronic records in tabular format that include the following information for a covered loan made under § 1041.5:

(i) The projection made by the lender of the amount of a consumer's net income during the relevant monthly period;

(ii) The projections made by the lender of the amounts of a consumer's major financial obligations during the relevant monthly period;

(iii) Calculated residual income or debt-to-income ratio during the relevant monthly period;

(iv) Estimated basic living expenses for the consumer during the relevant monthly period; and

(v) Other consumer-specific information considered in making the ability-to-repay determination.

(3) Electronic records in tabular format regarding type, terms, and performance of covered short-term or covered longer-term balloon-payment loan. To comply with the requirements in this paragraph (b), a lender must retain electronic records in tabular format that include the following information for a covered short-term or covered longer-term balloon-payment loan:

(i) As applicable, the information listed in § 1041.10(c)(1)(i) through (viii) and (c)(2);

(ii) Whether the lender obtained vehicle security from the consumer;

(iii) The loan number in a loan sequence of covered short-term loans, covered longer-term balloon-payment loans, or a combination thereof;

(iv) For any full payment on the loan that was not received or transferred by the contractual due date, the number of days such payment was past due, up to a maximum of 180 days;

(v) For a loan with vehicle security: Whether repossession of the vehicle was initiated;

(vi) Date of last or final payment received; and

(vii) The information listed in § 1041.10(c)(3).

for each covered loan that the lender originates.

(2)-(3) [Reserved]

(4) Retention of records relating to payment practices for covered loans. To comply with the requirements in this paragraph (b), a lender must retain or be able to reproduce an image of the following documentation, as applicable, in connection with a covered loan:

(i) Leveraged payment mechanism(s) obtained by the lender from the consumer;

(ii) Authorization of additional payment transfer, as described in § 1041.8(c)(3)(iii); and

(iii) Underlying one-time electronic transfer authorization or underlying signature check, as described in § 1041.8(d)(2).

(5) Electronic records in tabular format regarding payment practices for covered loans. To comply with the requirements in this paragraph (b), a lender must retain electronic records in tabular format that include the following information for covered loans:

(i) History of payments received and attempted payment transfers, as defined in § 1041.8(a)(1), including:

(A) Date of receipt of payment or attempted payment transfer;

(B) Amount of payment due;

(C) Amount of attempted payment transfer;

(D) Amount of payment received or transferred; and

(E) Payment channel used for attempted payment transfer.

(ii) If an attempt to transfer funds from a consumer's account is subject to the prohibition in § 1041.8(b)(1), whether the lender or service provider obtained authorization to initiate a payment transfer from the consumer in accordance with the requirements in § 1041.8(c) or (d).

[82 FR 54871, Nov. 17, 2017, as amended at 85 FR 44444, July 22, 2020]