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Thursday, August 21, 2014

Record Retention

Are we required to keep hard copies of records? Specifically, how long do we need to retain records relating to Regulation Z (TILA) compliance and periodic statements?

Generally, evidence of compliance does not need to be kept in hard copy. It is permissible to retain documents in any method that faithfully reproduces the documents, such as microfilm, microfiche, or computer programs (i.e., PDFs). Some lenders keep the entire loan transaction file indefinitely in electronic media; however, the creditor’s primary obligation is to keep sufficient records to reconstruct the compliance documents and disclosures.

For instance, a creditor is not required to retain each open-end periodic statement for a home equity plan, as long as specific information associated with each statement can be accessed. [12 CFR Supplement I, Part 226, Official Staff Commentary § 226.25(a)-2]

With the exception of advertising, Regulation Z sets forth a record retention period of two years after the date disclosures are required to be made or action is required to be taken. But an agency involved in supervising and enforcing TILA compliance, such as the CFPB, has the authority to extend the record retention period for longer than the statutorily mandated timeframe. [12 CFR § 226.25(a)]

Jonathan Foxx
President & Managing Director
Lenders Compliance Group