Q: Would it be a requirement of any regulation for an institution to get a written cancellation request from a borrower to cancel automatic loan payments from a deposit account? We hold the Note and the account. Do we need the request to be in writing or are we required to accept a verbal request as well as written one?
A: Preauthorized transfers are generally governed by Regulation E. Generally, under the Regulation, a preauthorized transfer may be stopped by providing the bank with either oral notice or written notice at least 3 days before the transfer is scheduled to occur. A bank is permitted to require written notice of a stop payment for preauthorized transfers, so long as this is disclosed within the account disclosure. https://www.consumerfinance.gov/rules-policy/regulations/1005/10/#b In the situation where a bank holds both a loan account and a deposit account, it is important to review both your loan agreement, as well as the deposit agreement to determine whether or not any additional notice is needed to cancel preauthorized transfers. This is because while an institution may not require the payment of a loan account via preauthorized transfers, banks holding both a deposit account and a loan account are permitted to give the customer additional benefits if the customer agrees for loan payments to be paid via preauthorized transfers. https://www.consumerfinance.gov/rules-policy/regulations/1005/10/#d-2
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