Ok-need your thoughts on this. We have always asked for a specific reason or purpose for every loan, but lately we have had long time customers who have expressed that they do not feel that they should have to give a specific purpose--invasion of privacy or whatever. Now I can definately understand the importance of obtaining this information on HMDA reportable transactions, but what about small consumer loans, is it permissable to simply state personal loan? If so can you point me to where exactly it discusses this? Comments appreciated...

Why wouldn't your institution want to know why the customer needs the money? Is it a legal request, etc.?

Don't forget the BSA issue also - any loan not secured by residential real estate and in excess of $10,000 - a specific purpose must be obtained.

FWIW - I will cite a lender here for not have a specific purpose on a loan. Not that it does any good, but it will be in my report.

I totally agree with you...it is only prudent lending in my mind. I appreciate your comments and yes of course the BSA requirement

My Compliance Officer used to work for a bank that would not ask for a loan purpose, at all. But then, they only did small $ consumer purpose unsecured loans, and later they were bought out.

Bad idea. How can you know what type documents need to be done? (Private Education Loan) How can you do your CALL report if it's Ag/small farmer, and they tell you "personal"? Maybe it's to pay a lawyer in order to file bankruptcy, to flee the country... If they were worried about invasion of privacy, they shouldn't be asking a business for money.

Well put!! Some are up in arms over Google Earth as an invasion of privacy. Some want to be able to request that the software blur the image of the overhead and street view of their homes...even though the view is not a live view....usually 2 to 3 years old...seems some city administration used Google Earth to see how many residents in its community had installed swimming pools without securing a permit...then fined the ones that had. Naughty people!!

There is a price for technology.

I agree...those that are fighting it are fighting a losing battle. Regarding privacy, my 84 year old Mom insists on shredding ANY paper that bears her name address...even if there is no other useful information on the paper. She's afraid if someone finds her name and address in the dumpster, her identity will be stolen. I tell her, "Mom, your name and address is in the phonebook and on the Internet." It doesn't matter...she insists on the practice. And then when the new phone book arrives, she throws the old one...yes...in the dumpster.