PENALTIES FOR LENDING COMPLIANCE VIOLATIONS

The accounting firm, McGladrey & Pullen, LLP, prepared a chart for their client banks showing the possible penalties that
could result from violations of lending compliance requirements. With their permission CAMELS' Eye® has prepared this
worksheet because it so succinctly summarizes the potential risks to a bank from making lending compliance mistakes.
ADMINISTRATIVE ACTIONS BY
REGULATIONS PUNITIVE DAMAGES CRIMINAL PENALTIES
REGULATORS
TRUTH IN LENDING ACT

Regulation Z - General Memorandums of Understanding Individual actions: Twice the amount Criminal penalties for willful
(MOUs), supervisory agreements, of the total finance charge up to violations: Fines up to $5,000,
cease and desist orders, and civil $1,000. Liability will never be less imprisonment for one year, or both.
money penalties. than $100.

Understated APR and/or Finance May order reimbursement to Class action lawsuits: the lesser of
Charge consumer. $500,000 or 1% of the institution's
net worth.

Consumer Loans Secured with Real Individual actions: Twice the amount
Estate Only of the total finance charge up to
$2,000. Liability will never be less
than $200.

RESPA

General MOUs, supervisory agreements,

cease and desist orders, and civil
money penalties.

Escrow Violations $50 each time a lender fails to

(24 CFR 3500.17) provide an initial escrow statement,
up to $100,000 for any one lender
during a 12-month period.

$100 each time the lender willfully

disregards the escrow rules with no
limit on the total amount.

Mortgage Transfer Rules Individual Actions: actual damages

(24 CFR 3500.21) and additional damages up to
$1,000.

Class action lawsuits: the lesser of

$500,000 or 1% of the institution's
net worth.

Kickback and Referral Violation A fine of not more than $10,000, one
(24 CFR 3500.14 & 15) year in prison, or both.

Use of Title Companies An amount equal to three times all

(24 CFR 3500.16) charges made for title insurance.

FLOOD DISASTER PROTECTION ACT

General MOUs, supervisory agreements,
cease and desist orders, and civil
money penalties.
Money penalties of $350 per loan, None
up to $100,000 annually for lenders
who engage in a pattern or practice
of not complying with the flood
insurance purchase or notification
requirements.
 PENALTIES FOR LENDING COMPLIANCE VIOLATIONS
The accounting firm, McGladrey & Pullen, LLP, prepared a chart for their client banks showing the possible penalties that
could result from violations of lending compliance requirements. With their permission CAMELS' Eye® has prepared this
worksheet because it so succinctly summarizes the potential risks to a bank from making lending compliance mistakes.
ADMINISTRATIVE ACTIONS BY
REGULATIONS PUNITIVE DAMAGES CRIMINAL PENALTIES
REGULATORS

EQUAL CREDIT OPPORTUNITY ACT

Regulation B MOUs, supervisory agreements, Limited to $10,000 in individual

cease and desist orders, and civil actions and $500,000 or 1% of the
money penalties. creditor's net worth, whichever is
less, in class actions.

Regulators must also notify the

Department of Justice if they find a
pattern or practice of discrimination
with fair lending laws.

HOME MORTGAGE DISCLOSURE ACT

Regulation C — General MOUs, supervisory agreements, None None

cease and desist orders, and civil
money penalties.

FAIR HOUSING ACT

General MOUs, supervisory agreements, Courts may award penalties not to Persons discouraging others from
cease and desist orders, and civil exceed $50,000 for the first violation abiding with the act could be fined
money penalties. and $10,000 for subsequent not more than $1,000, imprisoned
violations. not more than one year, or both.

Regulators must also notify the At their discretion, the courts also If bodily injury results: fines of not
Department of Justice if they find a may allow reasonable attorneys' more than $10,000 or imprisonment
pattern or practice of discrimination fees and costs. of not more than 10 years.
with fair lending laws.

Courts may also issue permanent or If death results: imprisonment for

temporary injunctions against future any term, up to life.
acts of discrimination.

FAIR CREDIT REPORTING ACT

General The FTC gives administrative

enforcement power to the federal
banking agencies.

MOUs, supervisory agreements,

cease and desist orders, and civil
money penalties.

Obtaining unauthorized credit Fines of not more than $5,000,

information on consumers. imprisonment of not more than one
year, or both.

Willful noncompliance with the act. Individual actions: actual damages,

punitive damages, court costs, and
reasonable attorneys' fees.

Negligent noncompliance with the Individual actions: actual damages,

act. court costs, and reasonable
attorneys' fees.
 PENALTIES FOR LENDING COMPLIANCE VIOLATIONS
The accounting firm, McGladrey & Pullen, LLP, prepared a chart for their client banks showing the possible penalties that
could result from violations of lending compliance requirements. With their permission CAMELS' Eye® has prepared this
worksheet because it so succinctly summarizes the potential risks to a bank from making lending compliance mistakes.
ADMINISTRATIVE ACTIONS BY
REGULATIONS PUNITIVE DAMAGES CRIMINAL PENALTIES
REGULATORS

COMMUNITY REINVESTMENT ACT

Regulation BB Regulators take into account an None None

institution's record when evaluating
various types of applications (e.g.,
for branches, office relocations,
mergers, consolidations, and
purchase and assumption
transactions) and may deny or
condition an application on the basis
of the institution's CRA record.

LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL

SHAREHOLDERS

Regulation O Regulators have the authority to First Tier — civil money penalties of None
issue administrative sanctions, up to $5,000 for each day the
including the imposition of civil violation continues.
money penalties when necessary,
and invoke regulatory enforcement
actions (MOUs, supervisory
agreements, and cease and desist
orders).

Second Tier — civil money penalties

of not more than $25,000 for each
day the violation continues.

Third Tier — civil money penalties in

an amount not to exceed the
applicable maximum amount: (1)
Individual - not to exceed $1 million;
(2) Member bank - not to exceed the
lesser of $1 million or 1% of the
banks total assets.

FAIR CREDIT PRACTICES ACT

Regulation AA MOUs, supervisory agreements, There is no specific provision for civil

cease and desist orders, and civil
money penalties.
suits; nevertheless, the act provides
for certain complaint procedures for
consumers and consumer groups to
follow when filing complaints to the
bank and regulatory authorities.

Regulators may impose penalties up

to $1,000 per day for every day an
institution is in violation of an
administrative action.

FAIR DEBT COLLECTION PRACTICES ACT

General MOUs, supervisory agreements, Individual actions: actual damages,

cease and desist orders, and civil other damages as the court may
money penalties. allow, up to $1,000, and reasonable
attorneys' fees.

Class action lawsuits: the lesser of

$500,000 or 1% of the debt collector
or creditor's net worth.