As a result, we would like to bring to your attention the effect that Truth-in-Savings will have on credit unions using an Undistributed Payroll Deduction account to accumulate payroll deductions prior to posting to the members' accounts.The Undistributed Payroll Deduction account is an accounts payable that is used to hold the payroll deduction balances that have been received from the employer, but not yet posted to the members' accounts.

The amendments are intended to enhance the consumer’s ability to notice and understand cost information generally provided in the form of a table.

Members cannot waive their rights under Truth-in-Lending by contract.


The term "principal" is defined in Appendix A to Section 707, as "the amount of funds assumed to have been deposited." § 707.2 Definitions. In some cases, these balances are held for several weeks before they are posted. CFR ; prev | next § 707.1 Authority, purpose, coverage and effect on State laws. It also directed the National Credit Union Administration (NCUA) to issue regulations for state-chartered and federally chartered credit



Reputation riskcan occur when the credit union incurs fines and penalties or receives decreased member confidence as a result of failure to comply with Part 707.





National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314

Frequently Asked Questions about Taxi Medallion Lending and the NCUA’s Supervision and …

4311.

This commentary is the means by which the staff of the Office of General Counsel of the National Credit Union Administration issues official staff interpretations of Part 707 of the NCUA Rules and Regulations.

12 U.S.C.



This written contract is best made a part of the payroll deduction agreement.With regard to payroll deduction for loan payments, Truth-in-Lending regulations will also apply.

The act … The statute directed the Federal Reserve Board (FRB) to implement regulations for all depository institutions except credit unions. To avoid potential violations of Truth-in-Lending, credit unions should maintain voluntary payroll deductions and provide members access to funds in Undistributed Payroll Deduction accounts.We are well aware of the difficulties that this aspect of Truth-in-Savings may cause, especially in small credit unions.

This would include any balances held in an Undistributed Payroll Deduction account. Generally, if payroll deduction is voluntary and the member has access to the funds while they are held in the Undistributed Payroll Deduction account, the credit union may enter into a contract with the member as discussed above. The Board of Governors of the Federal Reserve System (FRB) has amended Regulation Z (Truth in Lending) to revise disclosure requirements for credit and charge card solicitations and applications.

1.

The disclosure requirements are intended to inform consumers about the fees, annual percentage yield, interest rate, and other terms for deposit accounts. Accessibility, Limited English Proficiency & Exit StatementImplementation of the NCUA’s Regulatory Reform AgendaCollection of Examination & Supervision InformationNotice of Change in Official or Senior Executive OfficerElectronic Loan, Deposit & Investment Data CollectionFinancial Trends in Federally Insured Credit UnionsFrequently Asked Questions on the Low-Income Designated Area WorkbookFrequently Asked Questions on the Loss & Retention of the Low-Income DesignationCommunity Development Revolving Loan Fund Financial ReportsCorporate Asset Management Estate Recoveries & ClaimsResponding to the Collapse of the New York City Taxi Medallion MarketFrequently Asked Questions on the NCUA’s Sale of Its Taxi Medallion PortfolioFrequently Asked Questions about Taxi Medallion Lending and the NCUA’s Supervision and Response to the Medallion Market CollapseTruth in Savings Act (NCUA Rules & Regulations Part 707) We find this to be consistent with the intent of Truth-in-Savings and ultimately serves to benefit credit union members.In order for credit unions to "suspend" or "freeze" payroll deduction funds, so they would not be included in dividend calculations, a written contract must exist between the member and the credit union.

Official status. Truth-in-Savings Act Compliance
4311(b). The contract must indicate that members permit the credit union to hold, freeze, or suspend payroll deductions without adding them to their share account balances, and that by doing so, they may forfeit any dividends due to them under Truth-in-Savings.

These definitions indicate that the balance on which dividends are calculated is the amount that is in, applied to, or due to, a member's account. Introduction Comment for 1030.1 Authority, purpose, coverage, and effect on state laws Comment for 1030.2 - Definitions Comment for 1030.3 - General Disclosure Requirements Comment for 1030.4 - Account Disclosures Comment for 1030.5 - Subsequent Disclosures Comment for 1030.6 - Periodic Statement Disclosures Comment for 1030.7 - Payment of Interest Comment for 1030.8 - Advertising … If the payroll deduction is mandatory, or the payroll deduction is for an open-end loan and the member does not have access to the funds, the contract would either violate Truth-in-Lending regulations or result in difficult, if not impossible, disclosure.

Those include disclosures when an account is opened, upon request, when account terms are changed, when periodic statements are required, and when term share accounts mature.



We would like to remind you that NCUA remains committed to assisting credit unions with the implementation of Truth-in-Savings.