QUESTION
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?
ANSWER
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
