I was informed that the application we use for all real estates does not contain a space to document that the applicant intends to apply for joint credit, since Fannie Mae\Freddie Mac chose not to support the new requirement.
The last thing we want to do is add one more form to the application package just for this.

It sounds like the bank has to provide some sort of documentation of the applicants intent. Looking for suggestions on how others are addressing this. Reg B 202.7(d) (1)-3 is not mandatory till 4/15/04.

We use an Authorization to Obtain Information form and just above the signatures line in all caps bold italic underline letters we added the following:

ALL PARTIES SIGNING THIS AUTHORIZATION ARE AFFIRMING THEIR INTENT TO APPLY FOR JOINT CREDIT. A SINGLE SIGNATURE IMPLIES INTENT FOR INDIVIDUAL CREDIT.

Don:

If I may ask did you develop the authorization to obtain information form yourself, or is this a purchased form?

The reason I ask is I am also trying to figure out how to handle the 1003 application.

Thanks

Bankers Systems does have a form for a supplement to the 1003 that the customer signs to be compliant with the joint applicant changes with Reg B.

Is is okay to create your own form for commercial lending purposes - where there is no formal written application in some cases?

Bankers has indicated that this form will be available for download by 4-15-2004.

Yes you can create your own.

Bean, the form was in use when I came here 3 years ago. It does not appear to be a purchased form.

I have looked at other threads discussing "intent to be a joint applicant" and have a question. For aps received via the internet do we need to contact each applicant by phone and ask them of their intent?

We do not do internet applications, but you will have to somehow document their intent. I would suggest (if possible) modifying your internet app with radio buttons that indicate whether the app is individual or joint and make it a required field so they have to answer the question before they can submit the application.

Is this supplementary form really necessary for the 1003? This whole issue came about because of the use of financial statements instead of applications. I didn't think it was necessary to use any additional forms with the residential loan application.

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Is this supplementary form really necessary for the 1003?

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IMO, this is an unknown at this time. I for one do not feel it is necessary because of reasons discussed in previous threads, and David Dickinson is one of the biggest proponents that a jointly signed "application" should suffice as intent. However, the Reg. does say intent must be shown at the time of application, and with the model forms indicating an initial or signature is needed to show intent and not knowing how the examiner are going to look at this I have chosen the conservative path to get the intent affirmed by signatures.

Well, I'm sure hoping that I don't have to buy you flowers. If it comes to actually defending your position, let us know, I'm sure there are a few of us that would like to assist you in your arguments.

The model application forms for Reg B include the revised 1003. Why would we need to add an extra form to our application packet with language to the effect of "I intend to apply jointly or individually" if the regulation itself uses the 1003 as its model for consumer real estate loans?? I would think if the regulators had a problem with the 1003, they would not have included this as a model form. Or, it would have been modified with the boxes to indicate joint or individual application. We're having this conflict internally at my institution right now, and I'd like to see what everyone else here thinks. Thanks!

(and I wonder why I'm going gray before 30!)

Good letter! Looking forward to the reply.

Jane Gell from the FRB called yesterday while I was at the ABA Compliance School. I've tried several times, but I can't get in touch with her today. ARGH! However, I did get this responses from Nessa Feddis - Attorney from the ABA:

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I agree with your analysis: it was only intended to clarify that filing a joint financial statement should not be presumed to be a joint application. The Reg does not require written applications, though that is one option.

Let me put a call into the Fed and I will get back to you.
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What is the consensus for residential real estate loans? Do we need to add an extra form in our application packet or a radio dial on internet application with language to the effect that " I intend to apply jointly or individually.."? Why would the regulators include the 1003 application in the model regulation if they had a problem with it? Please let me know what you are doing in your institution.

I plan to treat an application as an application. If it contains information about two (or more) people and is signed by those people, those people applied for joint credit. We use the 1003 and a consumer application. For commercial and agricultural credit, I am encouraging my banks to develop a form that briefly outlines the credit being extended and provides a statement for all to sign (borrowers, co-borrowers, co-signers, and guarantors) stating that they are applying for said credit.

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What is the consensus for residential real estate loans?

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What we think and what the regulators think may differ, regardless if we all thought we were right. I was told the 1003 is being revised. If this is the case, there must be an assumption somewhere that it isn't compliant. But there is a difference between an application and financial statements. This was clear until the model forms were revised, seemingly blurring any line of distinction here. They showed applications with the statement.

David, Have you heard anything yet from Jane?

Andy, neither Fannie Mae or Freddie Mac have any plans to revise the URLA in the foreseeable future. It is unfortunate that what the FRB will tell you in a conversation is very different from the tone in its March 18th rule. This has caused a good deal of uncertainty.

I've heard both. You, being a forms vendor will have had direct contact, I assume.

I hope the FRB is reading these posts and striving to provide some guidance ASAP. If this isn't done, yesterday, enforcement should be selective and directed only to the heart of the matter.

I discusssed this matter with a fed staff attorney on Thursday March 18th. There are no plans to issue Offical Staff Commentary on this matter in the near future. The indication was that something other than the signature on the application affirming the accuracy of the data is needed. Some other effort is necessary to indicate the evidence of intent to be a joint applicant.

Jack, that is at least the most authoritative comment we've had. Thank you.

Based on your conversation, a 1003 should have a separate affirmation?