Regulatory Alerts2003-12-30
Debt Cancellation Contracts and Debt Suspension Agreements
The Louisiana Office of Financial Institutions authorizes state-chartered banks, savings associations, savings banks, and credit unions to offer debt cancellation contracts and debt suspension agreements as incidental banking powers. Institutions must adopt federal best practices by ensuring reasonable charges, avoiding excessive coverage stacking, maintaining adequate reserves or licensed insurance, and verifying insurer financial condition. Management must document risk assessments and compliance, as examiners will evaluate these practices during future examinations to determine impacts on institutional safety and soundness.
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