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#170264 - 03/17/04 03:15 PM
intent to be joint applicant
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Anonymous
Unregistered
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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.
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#170265 - 03/17/04 03:20 PM
Re: intent to be joint applicant
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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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.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#170266 - 03/17/04 03:32 PM
Re: intent to be joint applicant
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100 Club
Joined: Mar 2002
Posts: 225
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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
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#170267 - 03/17/04 03:55 PM
Re: intent to be joint applicant
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Gold Star
Joined: Jun 2002
Posts: 310
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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.
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#170268 - 03/17/04 04:27 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Is is okay to create your own form for commercial lending purposes - where there is no formal written application in some cases?
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#170269 - 03/17/04 04:47 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Bankers has indicated that this form will be available for download by 4-15-2004.
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#170270 - 03/17/04 05:08 PM
Re: intent to be joint applicant
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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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.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#170272 - 03/17/04 09:55 PM
Re: intent to be joint applicant
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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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.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#170273 - 03/17/04 09:58 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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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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#170275 - 03/18/04 01:50 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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#170276 - 03/18/04 02:07 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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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 opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170278 - 03/18/04 03:45 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Quote:
and I have chosen the rebellious path and am holding firm to the "spirit and intent" of signatures to suffice on the application...HOWEVER!!! I am sticking with the FED's advice of making sure it's either in their own hand or evidenced as a phone app and spelled out by the LO.
And as I said earlier...I will defend this to the DEATH!  
I'm with you on this one. Below I have pasted a letter that I wrote to the Fed for clarification:
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I am requesting a letter of interpretation to clarify Section 202.7(d)(1) of Regulation B. This section states, "A creditor shall not deem the submission of a joint financial statement or other evidence of jointly held assets as an application for joint credit." In reading the preamble to this change and from reading other information, (such as the FDIC’s Financial Institution Letter 6-2004), it appears the intent of this regulatory amendment is to clarify that a joint financial statement does not constitute an application. In other words, an attestation is not an application.
However, the commentary to this same section [202.7(d)(1)#3] states in the first sentence, "A person’s intent to be a joint applicant must be evidenced at the time of application." Many of our clients and members of the banking community are indicating confusion regarding the preceding sentence. They interpret it to mean that every time a promissory note contains more than one applicant, the bank will need to prove that each joint applicant intended to apply by showing evidence of some sort, such as the information contained on top of the model application forms.
I believe that the Federal Reserve is trying to address, simply, that an attestation is not an application. Therefore, when I read the first sentence of this commentary, I infer it to mean that if you have received a joint financial statement, then a person’s intent to be a joint applicant must be evidenced at the time of application. If this is not true, why then, did the Federal Reserve not simply require an application in all situations?
It is clear from the preamble that the Federal Reserve did not wish to require applications in all cases. While I believe it would be helpful to stop any potential arguments, is it required to have evidence any time there are joint applicants? For instance, if John Doe and Jane Smith apply jointly, but submit individual financial statements, does Section 202.7(d)(1) require evidence of both of them even though they did not submit a joint financial statement? Does the first sentence of the commentary (#3) stand alone? Is it required 100% of the time when there are joint applications or only when you have a joint financial statement?
Since the mandatory date for this amendment is April 15, 2004, it would be helpful to receive a reply as soon as possible, so that we can be clear and advise our clients accordingly.
Thank you for your time regarding this matter. I look forward to receiving your letter of clarification.
Sincerely,
David A. Dickinson,
President
-----------------------------------------------------------
When (if) I receive a reply, I will post it here as well.
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#170279 - 03/18/04 04:09 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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Good letter! Looking forward to the reply.
_________________________
My opinion only. Not legal advice.
Say you'll haunt me - Stone Sour
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#170281 - 03/22/04 04:20 PM
Re: intent to be joint applicant
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100 Club
Joined: Nov 2003
Posts: 181
Springfield, Illinois (Souther...
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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.
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bcastle CRCM
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#170282 - 03/22/04 04:30 PM
Re: intent to be joint applicant
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Member
Joined: Feb 2004
Posts: 64
Iowa
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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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#170286 - 03/22/04 10:05 PM
Re: intent to be joint applicant
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10K Club
Joined: Oct 2000
Posts: 27,754
On the Net
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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.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#170288 - 03/22/04 10:09 PM
Re: intent to be joint applicant
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10K Club
Joined: Oct 2000
Posts: 27,754
On the Net
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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?
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#170290 - 03/23/04 08:38 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Quote:
David, Have you heard anything yet from Jane?
No not yet. Unfortunately, Jane was sick on Monday and today.
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#170291 - 03/23/04 09:16 PM
Re: intent to be joint applicant
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Junior Member
Joined: Mar 2004
Posts: 29
IL
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While on the topic of intent, the official staff interpretation of 202.7(d)(1) states the term joint applicant refers to someone who applies contemporaneously with the applicant for shared or joint credit. It goes on to say that a person's intent to be a joint applicant must be evidenced at the time of application. Based on the language used in the interpretation, specifically the word "contemporaneously", I am of the opinion that if two individuals intend to apply for joint credit both individuals must be present at application and both must initial or sign showing evidence of their intention to be joint applicants. Is this correct, or could the bank accept an ap from a single applicant with the understandng that the co-applicant will come into the bank at a later time/date to sign?
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#170292 - 03/24/04 01:34 AM
Re: intent to be joint applicant
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Anonymous
Unregistered
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I have a similar question, will a (faxed) copy of the application with the signature of one of the co-applicant be acceptable.
The original application was signed only by one applicant however the note was signed by both (husband and wife)
The application should have been signed by both borrowers
however,only the husband signed the original, can I now correct this issue with a (faxed) signature on application from the wife.
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#170293 - 03/24/04 02:54 AM
Re: intent to be joint applicant
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Platinum Poster
Joined: Jul 2001
Posts: 564
South Carolina
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IMHO, this would not be acceptable. If I were an examiner looking at the file, I would think you had one applicant, the husband; but had the wife sign the note and were now trying to make it look right by having the wife fax you a signed application. Surely this would not be the case  but it is how it would look. The word contemporaneous means, "happening in the same period of time".
I do think you could have a single applicant sign and have the other applicant come in within a reasonable time to sign, but I would not process the loan and get both signatures on the note until the application was complete with both signatures showing intent to apply for joint credit.
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#170294 - 03/24/04 05:51 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Okay, I know I am beating a dead horse here but I am still on the fence & am wondering on which side I should "fall". Are you or are you not going to require the joint intent initials for guarantors? I spoke with someone at ABA a while back when this issue came about & he suggested to do so. I am leaning that way as "applicant" under Reg B is defined as including "any person who is or MAY BECOME contractually liable". However, my senior lenders want to see where in the Reg it says they have to do this (of course). That's where I am stuck. Any help would be greatly appreciated!!!! 
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#170295 - 03/24/04 05:51 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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We have taken the stance that for commercial purpose loans, by two individuals, that our FS contains applicable verbage for intent. However, I recently heard that if we choose to use the FS, that a loan amount must be indicated. Has anyone else heard of this "requirement"?
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#170297 - 03/24/04 06:19 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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What is happening here is that our current lawmakers have taken the low road to regulatory burden on our banking industry. We have been saddled with expanded HMDA, HOEPA, and now even our loan applications are not applications unless someone signs a seperate piece of paper declaring it so. What is happening here in our industry is happening all over our country. No one wants to accept responsibility for one's own action. I just cannot sit here and read this montage of rhetoric without ranting. "It is what it is", get over it. Regulators are afraid to state a position and the lawmakers are pandering to whatever is the hot issue of the day, which leaves us dead in the water in the middle of all this mess.
Does this mean that we need a seperate notice when the customer wants to open an account with a joint person?
What ever happened to good 'ol American common sense. Do we need a law for every aspect of our daily lives. Give me a break!!!
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#170298 - 03/24/04 06:29 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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And don't forget that if Banks were not illegally requiring the signature of non-applicant spouses we wouldn't have this mess either. This is not a "new" requirement, they just finally reduced it to writing. While I agree, the way they addressed it may be overkill, it is yet again the banking industry's own fault and we have shot ourselves in the foot once more.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170299 - 03/24/04 06:33 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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I don't understand why you would have a guarantor sign an intent to be a joint applicant. They are not a joint applicant.
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#170300 - 03/24/04 07:01 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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If you are looking outside of the officers for guarantees of a closely held company, especially if there are spouses involved, it would be in your best interest to get a document acknowledging their intent to guarantee the loan. This situation is where this whole mess regarding "intent to become obilgated" (which would be a better term for what they are trying to accomplish) started to begin with.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170302 - 03/24/04 07:17 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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I would think that would cover it sufficiently.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170303 - 03/24/04 07:54 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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You know...it's pretty asinine and amazing that we have had to spent SO much time on this one ambiguous little out of context issue! I'm afraid I might just punch somebody if they dare say we aren't showing proper intent down the road when this is actually looked at by examiners. They've offered SO MUCH help! AAARRRGGGHHHH!
BTW, I've decided to back down from my "do or die" stance and did bite the bullet and made a form today for use on our 1003 and HELOC loans due to the obvious controversy. I am STILL not budging on our MARK IV applications tho...enuf is enuf!
_________________________
My opinion only. Not legal advice.
Say you'll haunt me - Stone Sour
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#170304 - 03/24/04 08:51 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Quote:
If you are looking outside of the officers for guarantees of a closely held company, especially if there are spouses involved, it would be in your best interest to get a document acknowledging their intent to guarantee the loan. This situation is where this whole mess regarding "intent to become obilgated" (which would be a better term for what they are trying to accomplish) started to begin with.
Randy: Thanks for your reply. I am talking, for example, ABC Corp. gets a loan. We have the four officers of ABC Corp. sign personal guarantees to back up the loan. Since Reg B defines an applicant as any person that may become liable, are they then an applicant & need to show intent?
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#170305 - 03/24/04 09:00 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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IMHO, probably not. How do you like that answer - huh?
If you have a bank policy that defines which officer/ownership types the bank requires to personally guarantee loans to these types of organization, you should not need a statement. However, I usually suggest that during the application process, the corporate/ownership structure of the company be represented in some manner so the bank can determine who they would normally look towards for a guarantee. With that process in place, I would only look for intent statements from anyone that falls outside of your normal policies, which would include spouses. You shouldn't be making the request of intent from only non-officer/owner spouses, as then you would be treating them different than non-married guarantors that don't fit your normal policy.
And, as I said, MHO.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170306 - 03/24/04 09:19 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Thanks for the clarification. Boy, if this stupid rule isn't a case of you're da**ed if you do & your da**ed if you don't, then I don't know what is!
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#170307 - 03/25/04 05:49 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Quote:
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:
-----------------------------------------------------------
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.
----------------------------------------------------------
I'm very disappointed. I just talked to the Fed and they provided answers - but the wrong ones! Here's a summary of our conversation.
1. We do need evidence 100% of the time where there are joint applicants.
2. If all applicants sign an application, you have your evidence. Most likely the application states "application for credit", "Borrower/Co-borrower", etc. so this is evidence that they want to apply - even if the attestation above their signatures doesn't say "I wish to apply". The Evidence at the top of the model forms is not necessary - this was just a way to demonstrate the Evidence.
3. Evidence does not have to be signed by the applicants. For instance, if you have a phone application, the loan officer can simply put a note in the file stating that he/she took a joint application on this date for this much.
It was stressed that all the loan officer needs to do is show intent. The loan officer has great latitude in how to do that.
We'll see. 
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#170308 - 03/25/04 06:36 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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David, I'm confused by the fact that you said they gave the "wrong" answers. Aren't these answers in agreement with what you've been saying all along?...If they sign an application they are showing intent, therefore, the URLA is fine the way it is. Isn't that what they are saying?
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#170311 - 03/26/04 12:30 AM
Re: intent to be joint applicant
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10K Club
Joined: Oct 2000
Posts: 27,754
On the Net
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Sometimes you have to be careful what you wish for. I believe that banks will be able to establish solid procedures to substantiate this and in the long run, we'll be better off than if we had strict rules without flexibility.
You always run the risk of the rogue examiner, just as they run the risks of the rogue banker.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#170312 - 03/26/04 02:20 PM
Re: intent to be joint applicant
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Member
Joined: Feb 2004
Posts: 64
Iowa
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It's not really a case of the rogue examiner, Andy. Ever been to an FDIC school? Bring 60-100 examiners from across the nation, set them before nationally-recognized speakers that spice their discussions with "Banker Gone Wild", and then turn them loose on humanity. The worst is the White Collar Crimes seminar. Anyone can get caught up in the idea that, "by golly, I'll bet we got wunna them in our territory, an' Ima gonna find um!" If examiners don't have solid criteria, interpretations fall all over the board, and no examiner looks "good" if all of their reports show their banks are clean. I examined for 12 years and part of the criteria for advancement was whether you were in charge of enough "problem" bank exams. Sorry for the soap box act, but give me a solid rule to follow any day!
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#170313 - 03/26/04 03:57 PM
Re: intent to be joint applicant
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Power Poster
Joined: May 2002
Posts: 3,608
Near the Land of Enchantment
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So, I'm still a little confused. David, did the Fed tell you that all applicants signatures on an application form meets the requirements of the reg? If that's the case - that helps me out a lot! If I don't have to require an extra acknowledgement along with 1003's - that will save lots of headaches.
_________________________
Opinions my own.
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#170314 - 03/26/04 10:33 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Quote:
So, I'm still a little confused. David, did the Fed tell you that all applicants signatures on an application form meets the requirements of the reg?
Yes. She said if you have a signed application, you have evidence that they wanted to apply.
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#170315 - 03/29/04 02:59 PM
Re: intent to be joint applicant
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Junior Member
Joined: May 2002
Posts: 46
On the banks of the Rio Grande
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Not to beat a dead horse, but according to the instructions at the top of the 1003, the non-applicant spouse in a community property state is asked to fill in their information. In such case, the non-applicant would sign the application form certifying that the information is correct, but not applying for the loan. In such a case, it would seem that the notice would be necessary.
I am not saying that I like the idea, but that is what I see. Am I mis-reading something?
_________________________
People only accept change when they are faced with necessity,and only recognize necessity when a crisis is upon them.J.Monnet
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#170316 - 03/29/04 04:12 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Quote:
Not to beat a dead horse, but according to the instructions at the top of the 1003, the non-applicant spouse in a community property state is asked to fill in their information. In such case, the non-applicant would sign the application form certifying that the information is correct, but not applying for the loan. In such a case, it would seem that the notice would be necessary.
I am not saying that I like the idea, but that is what I see. Am I mis-reading something?
Are you saying that a non-applying spouse would fill out a form entitled "Uniform Residential Loan Application" and would complete info under the Co-Borrower headings? They would also sign the Co-Borrower's Signature line, but they wouldn't be applying?
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#170317 - 03/29/04 04:24 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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I can understand the confusion, but in this case they are asking for the sole applicant to complete the co-borrower information on thier spouse under certain conditions. No where on the application does it indicate that the spouse has to complete the information or sign the form. For those banks in community property states this is going to be something to watch out for. Even if the spouse signs, IMHO if one of those two boxes are checked, you would need your i's dotted and t's crossed before getting a signature on the note.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170318 - 03/29/04 04:48 PM
Re: intent to be joint applicant
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Gold Star
Joined: Sep 2001
Posts: 314
Midwest
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I called the Fed on Friday and spoke with Minh-Duc Le, one of the attorneys listed in the Federal Register notice for this issue. Her statements were similar to what David Dickinson reported above on 3/25/04, but not as conclusive.
She stated that the requirement was meant to be flexible and that it only requires a bank to have a way to clearly document who actually applied for credit. She said that we don't need a separately signed section on the application, or elsewhere, stating intent for joint/individual credit if the bank has a way to clearly document who actually applied for credit. She stopped short of saying that signatures at the bottom of a regular application would meet this requirement when the language with the signatures doesn't explicitly state that the signing party is actually applying for credit.
Similarly, I asked about acceptable practices to document intent for phone applications. In particular I asked if the lender can ask the question verbally and document the answer on the application or elsewhere in the file. She reiterated that the requiement is flexible and that each bank needs to develop procedures based on their own comfort level that they can show that they met the requirement. She added that a signature from the applicants would be best, but that other options would be acceptable. I'm also unsure about whether a signature from one of the joint applicants is sufficient, or if we need all joint applicants to document their own intent. I would have thought that we need something frome each joint applicant, but based on her answers to my questions, I wonder if it may be adequate to get a statement from one covering all joint applicants.
I also asked about how to document intent for people who are going to personally guarantee a business-purpose loan in situations were all guarantors don't meet face to face with the lender during the application phase. She said she'd need to look into it and get back with me.
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All statements are my own and not necessarily those of my employer.
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#170319 - 03/29/04 05:29 PM
Re: intent to be joint applicant
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Diamond Poster
Joined: Oct 2001
Posts: 1,570
Wisteria Lane..
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To implement procedures for the joint intent to apply for business loans, I was looking for a form. I researched the past posts and did find one from David Dickson, but it appears to be more applicable to consumers than business requests. In the back of my mind, I'm picturing another form (that I've either seen or dreamed about). The form had one section for business applications (with an appropriate variety of categories to check based on type of applicants) and one for consumer credit that was similar to David D's form. I can't however find this Business/Consumer Intenet to apply form. Does anyone know how I can find it? I thought it was on these threads, but I have searched unsucessfully.
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#170324 - 03/29/04 10:10 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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I think if you go back up this thread you will see that the guarantee issue has already been discussed regarding when and when not an intent form would be advisable.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170325 - 03/30/04 01:05 AM
Re: intent to be joint applicant
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10K Club
Joined: Oct 2000
Posts: 27,754
On the Net
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Terry, congrats on at least talking to someone. I never heard back from these folks.
Two things, while I am worried about the rogue examiners wanting "proof" I enjoy the flexibility, especially with those examiners looking at the spirit and intent.
Two, I believe to an extent we are making this more difficult than intended, bearing point 1 above in mind, and that is why they are saying no further guidance is required.
But as to the simplified replies you got, I'll bet some 35 years ago (almost 36) someone said, "hey, how about a simple truth in lending law so consumers can be more informed".
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#170326 - 03/30/04 05:06 PM
Re: intent to be joint applicant
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Diamond Poster
Joined: Dec 2003
Posts: 1,342
Wisconsin
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So, what's the concensus regarding business loans? Do we get a signed intent form only if the borrowers are individuals? Or does it apply to entities as well?
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#170327 - 03/30/04 06:05 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Here's the latest update I have on the "evidence" saga. This is from Nessa Feddis, who is an attorney for the ABA:
-----------------------------------------------------------
-----Original Message-----
From: Nessa Feddis [mailto:NFEDDIS@aba.com]
Sent: Monday, March 29, 2004 2:19 PM
To: Sczyrba, Meg
Subject: Re: FW: Evidence of Intent To Apply
I spoke to Jane Gell who agrees with us and does not believe there is any ambiguity. There is no requirement for a written application for joint accounts: banks can rely on procedures that show they obtained an application from both spouses. However, to protect the banks from Reg B claims, there has to be some sort of indication that both spouses have applied, not just signed the contract. This could be determined in a variety of ways, including a written application, but oral permission is acceptable if there are established procedures in place.
In some cases, a written application may be the only way, e.g., if a card marketer solicits a person, asks them if the applicant wants the spouse on the account, relies on the applicant's response only, the bank could be vulnerable if it turns out if the spouse did not want to be liable on the account. Could get tricky, for example, if the couple were about to separate.
-----------------------------------------------------------
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#170329 - 03/30/04 06:42 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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I think the guarantee issue is the easiest to solve. Have a policy that says that specific owners or officers are expected to guarantee loans on closely held business and get an intent to guarantee from anyone outside of that group, including any spouses that may become involved.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170330 - 03/31/04 06:45 PM
Re: intent to be joint applicant
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Gold Star
Joined: Sep 2001
Posts: 314
Midwest
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I'm beginning to warm up to Randy's idea. It makes perfect sense. However, from a practical matter, I'm concerned about having to rely on commercial lenders to remember when to get the form signed, especially in situations where a written application is not taken. I feel some safety in making it a one-size-fits-all procedure that they do all the time. If it's a standard daily practice I think it'll be more reliable.
The same goes for consumer-purpose loans. While the regulation only requires us to document intent for joint credit, we're taking the approach that if you always document intent then lenders never have to make a special effort to remember it just for joint applications. It also provides an affirmative statement of intent for every application so you don't have to assume it's an individual application when nothing is documented.
_________________________
All statements are my own and not necessarily those of my employer.
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#170331 - 03/31/04 07:04 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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Terry - no disagreement from me. Standardization is the key to consistency. I have been advocating using commercial loan application forms for 15 years to document applicants and guarantors, since the first spousal signature violation situation in which I was involved. However, is an intent to guarantee required in all cases? - I think not if you could successfully implement my suggested procedure. Good luck!
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170332 - 03/31/04 07:06 PM
Re: intent to be joint applicant
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Gold Star
Joined: Sep 2001
Posts: 314
Midwest
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I'm beginning to warm up to Randy's idea. It makes perfect sense. However, from a practical matter, I'm concerned about commercial lenders being relied on to remember when to get the form signed, expecially in situations where a written application is not taken. I feel some safety in making it a one-size-fits all procedure that they do all the time. If it's a standard daily practice I think it will be more reliable.
The same goes for consumer-purpose loans. While the regulation only requires us to document intent for joint credit, we're taking the approach that if you always document intent then lenders never have to make a special effort to remember it for joint applications. It also provides an affirmative statement for every application so you don't have to assume its an individual application when nothing is documented.
_________________________
All statements are my own and not necessarily those of my employer.
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#170334 - 03/31/04 09:54 PM
Re: intent to be joint applicant
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Diamond Poster
Joined: Oct 2001
Posts: 1,570
Wisteria Lane..
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Here's what I'm thinking about (a portion of this is from an idea I got from Joker and a part from David Dickson):
Commercial Loan Information Sheet
This form is required when a loan application is not used for a loan request.
Date_________
Name of Borrower or Entity _____________________________
Loan Purpose ___________________________________
Loan Amount $__________________
Co-Borrower(s) __________________________ _________________________
_________________________ _________________________
Guarantor(s) _________________________ _________________________
_________________________ _________________________
Please check one:
Individual
( ) I am applying for individual credit in my own name and I am relying on my own income and assets and not the income or assets of another person.
( ) I am applying for individual credit and I am relying on my income or assets, as well as income or assets from other sources.
( ) We are applying for joint credit; the names of the co-borrowers are listed above
Commercial:
( ) I am applying for credit in the Borrower/Entity name listed above. I am the only intended signer for this loan request.
( ) The individuals listed above as Co-Borrower(s) and/or Guarantor(s) are the intended signers for the loan request in the name of the Borrower or Entity listed above.
Signature________________________________
Signature________________________________
Signature________________________________
Note: This form is to be signed only by the individual(s) present when the initial loan request is made
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#170336 - 03/31/04 10:08 PM
Re: intent to be joint applicant
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Diamond Poster
Joined: Oct 2001
Posts: 1,570
Wisteria Lane..
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Correct, so I plagiarized (er borrowed) the words of the other BOLers and added to it. So, far this is my draft with only a short time to go.
_________________________
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#170337 - 03/31/04 10:21 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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After all this, I still do not see definite answers to all the questions. It appear banks have some fexibilty and must establish procedures/policies. Which is what I am going to do and THEN go on vacation. Something like this: We will use the Bankers System's Consumer Loan App which has the intent language at the top, will not have the intent laguage on the URLA or use a separate form at this time, and for commercial lending will have a separate form.
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#170339 - 03/31/04 11:13 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Quote:
Something like this: We will use the Bankers System's Consumer Loan App which has the intent language at the top, will not have the intent laguage on the URLA or use a separate form at this time, and for commercial lending will have a separate form.
Anon, is your commercial form similar to Lois'?
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#170341 - 04/01/04 01:07 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Quote:
My loan officers are fussing about having to get this for every credit. If we have someone who is a long-time customers and comes in quite often they do not have them complete an application every time. They are wanting me to say that they wouldn't have to have a separate form completed for intent either. I'm not getting that feeling from reading these posts. So...if an application is not completed every time, we will still have to complete an intent form, correct?
This new change doesn't care if they are established customers or not. In fact, maybe a loan officer has been making a spouse sign for years. This is the spouse's chance to say "no".
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#170342 - 04/01/04 01:08 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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Quote:
Correct, so I plagiarized (er borrowed) the words of the other BOLers and added to it. So, far this is my draft with only a short time to go.
Wonderful! That's how things get better. If you can stand on my shoulders and see further, go for it. Borrow away!
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#170344 - 04/01/04 05:45 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Has anyone shared a commercial loan form to be used as "evidence of intent"? If so, how do I access it?
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#170346 - 04/01/04 10:24 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Sorry, but I cannot get this link to work, nor will the longhand. I think the computers are just as confused about this issue as we are. thanks.
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#170347 - 04/02/04 04:22 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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let's try it again! Hopefully, this one WILL work! Thanks to GreatBlue, btw!
_________________________
My opinion only. Not legal advice.
Say you'll haunt me - Stone Sour
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#170350 - 04/12/04 03:19 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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I'm interested if anyone has considered the following question? Can one spouse sign the evidence of intent to apply for joint credit for another spouse under a valid Power of Attorney? It's an idea I've heard proposed for use primarily in connection with Ag lending. Any thoughts?
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#170351 - 04/12/04 04:00 PM
Re: intent to be joint applicant
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10K Club
Joined: Oct 2000
Posts: 27,754
On the Net
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I asked this basic question of the FDIC. My question was, can one spouse affirm the others intent to be joint. The answer was that you cannot assume they have a POA to do so. If they do have a POA that would facilitate borrowing, why not? Certainly it is valid for that.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#170353 - 04/13/04 03:09 PM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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My bet is that you won't have a problem as it clearly states limitations for individual credit. You might run it by your regulator and type up their opinion on it.
_________________________
My opinion only. Not legal advice.
Say you'll haunt me - Stone Sour
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#170354 - 04/13/04 03:15 PM
Re: intent to be joint applicant
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Member
Joined: Feb 2004
Posts: 64
Iowa
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Quote:
If youa re applying for individual credit in your own name and are relying on your own income or assets and not the income and assets of another person as the basis of repayment of the credit requested, or if this statement relates to your guaranty of the indebtedness of other persons, firms or corporations, complete only sections, x,y and z. There is no mention of joint applicants, etc. Do I still need language?
I'm not grasping the line of thinking here. Why are you documenting that the financial statement is not being completed jointly?  What am I missing?
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#170356 - 04/15/04 04:47 AM
Re: intent to be joint applicant
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10K Club
Joined: Nov 2000
Posts: 18,763
Central City, NE
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The following is the ABA's stance on this issue. The memo was passed on to me by Nessa Feddis - an attorney with the ABA. She gave me permission to post it here. ----------------------------------------------------------- On April 15, creditors must comply with changes made last year to Regulation B (Equal Credit Opportunity). Included in the amendments was clarification about proof of intent for joint applications. The Board was addressing concerns raised when a signor on a loan later asserts that although he or she signed the note, he or she never intended to apply, and thus the creditor violated Regulation B by requiring the signature of an additional party when the applicant was individually creditworthy. There has been confusion about the meaning of the changes and incorrect assertions that the regulation now requires written applications for all joint applications and that the standard Freddie Mac/ Fannie Mae residential loan application (form 1003), properly completed and signed, is not sufficient to show intent to apply for joint credit. To clear up the confusion, bankers should be aware: • There is no new requirement that loan applications be in writing (except where elsewhere required). This is clear in the preamble to the final regulations found at: http://federalreserve.gov/boarddocs/press/bcreg/2003/20030305/attachment.pdf. • The Fannie Mae/ Freddie Mac residential loan application (form 1003) is sufficient in showing intent to apply jointly if properly completed and signed by both applicants. • Intent to apply jointly must be evidenced at the time of application and should be documented in some fashion. That both parties signed the loan contract does not show intent to apply jointly. • Intent to apply jointly may be shown through a written indication from the applicant, but this is not required. Procedures that document intent to apply jointly suffice. For example, a note to the file based on an oral joint application may be sufficient in appropriate circumstances. • Creditors cannot presume that submission of joint financial information constitutes an application for joint credit. -----------------------------------------------------------
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#170358 - 04/15/04 12:48 PM
Re: intent to be joint applicant
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Gold Star
Joined: Sep 2001
Posts: 314
Midwest
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I definitely appreciate hearing the ABA's position because they do speak with authority. But I think this is one of those compliance issues where the big challenge is not in determining what the reg requires, but in determining a procedure that will meet those requirements. Flexibility is a double edged sword. We're all left to try to find something that will insure compliance but won't be overly burdensome and impractical for lenders and customers.
What's the ABA's basis for their position that the Fannie 1003 is adequate. Doesn't that conflict with what some of you have reported from the regulators?
I'm also still not sure what is necessary in a very common scenario where there are joint applicants (such as husband and wife) but only one comes into the bank to conduct the face to face application. Earlier discussions on this topic reported that at least some of the agencies will not accept one applicant making a statement on behalf of the other in a phone application. Isn't it the same problem in a face to face with only one of the joint applicants present?
_________________________
All statements are my own and not necessarily those of my employer.
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#170360 - 04/15/04 01:48 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Thanks for the info David! (when I tried the link it didn't work. Anyone know where we can find it on their site?) Thanks.
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#170361 - 04/15/04 01:51 PM
Re: intent to be joint applicant
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Member
Joined: Feb 2004
Posts: 64
Iowa
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#170365 - 04/15/04 05:38 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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Thank you for posting the ABA's memo. I assume that the 3rd bullet ("Intent to apply jointly must be evidenced at the time of application and should be documented in some fashion...")indicates that if the applicants complete an application form that has separate labeled sections and signature lines for both the "applicant" and "co-applicant", then intent to apply jointly would be satisfactorily evidenced. In other words, we shouldn't have to revise our forms (using this example) to include special "intent" language, because intent is implied, right??
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#170366 - 04/15/04 06:13 PM
Re: intent to be joint applicant
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Diamond Poster
Joined: Nov 2000
Posts: 1,820
Southern California
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I posted this information already, but probably in a different thread. A lead examiner at the FDIC in San Francisco said that signatures below a paragraph attesting to the correctness of the information would not be sufficient. He stated that "intent" had to be documented for joint applicants. I modified my forms to match the model forms. The lead examiner said that if I do this - I have a SAFE HARBOR. Like many of you, I am fed up with this whole thing. I am going to follow the FDICs advice and sleep tonight. 
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Dolly Nugent
CRCM
Opinions expressed are my own.
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#170367 - 04/15/04 08:30 PM
Re: intent to be joint applicant
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10K Club
Joined: Jul 2001
Posts: 83,393
Galveston, TX
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Dolly,
But that's the problem - a "lead" examiner is not allowed to interpret the law and should not be making the call on what is acceptable or not. He is in affect writing new regulations - which is dead wrong. You should not feel that you have to modify bank polily to meet the whims of your specific examiner.
You have to develop a policy within your organization that complies with the intent of the law and regulation and then they have to prove that your method doesn't comply. They can't make this up as they go. If you determine that your policy is that intent of an applicant is determined by the applicant completing and signing the application form - then how can they tell you no?? Only the applicant can challenge that in court - it is really not up to the regulators to make that call.
There has been no change in the regulation - so how can a "lead" examiner suddenly say that a "new form" is required??? Have you been in violation of Reg B all this time??? These guys need to chill.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#170368 - 04/15/04 08:34 PM
Re: intent to be joint applicant
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Anonymous
Unregistered
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The SAFE HARBOR aside, my point is that they had to consciously complete the information in the "co-applicant" section of the application, and consciously sign the "co-applicant" signature line of the application. Even if the attestation above the signature line only addresses accuracy and "correctness", it seems to me that the co-applicant's intent to apply jointly is evidenced by the fact that they decided to fill out and sign a credit application in the first place.
I believe this is the point David Dickinson has been trying to make all along, and the ABA memo supports it.
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#170369 - 04/15/04 08:48 PM
Re: intent to be joint applicant
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Member
Joined: Feb 2004
Posts: 64
Iowa
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Quote:
they have to prove that your method doesn't comply.
Sorry, Randy. You're speaking from a higher plain. We only take interpretation issues so far and then we figure out a way to do what they say. Banging your head against the wall only gives you a headache. Our profit motive says you don't waste money fighting city hall.
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#170370 - 04/15/04 08:56 PM
Re: intent to be joint applicant
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Diamond Poster
Joined: Nov 2000
Posts: 1,820
Southern California
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The lead examiner told me that he showed my forms to their attorneys. I had added "My signature below is evidence of my intent to apply for a loan" above the Applicant and Co-Applicant signature lines on my forms.
This was his response:
"I reviewed your attached forms and your proposed wording above the signature line. Both the FDIC and the FED share the opinion that two signatures at the bottom of a uniform residential loan application, or any other application THAT HAS NOT BEEN MODIFIED TO SPECIFICALLY DOCUMENT AN INTENTION TO BE JOINT APPLICANTS, will not be considered documentation of an intention to be joint applicants. At this point you have several options, you can use your current application and have both applicants initial the joint applicant with spouse box at the top of the application to show intent, or you can use a separate form and have both applicants sign it for each application you treat as a joint application. Having a separate form for joint applicants to show intent should address your concern of intent being overlooked by applicants."
I changed my forms, as he said the application had to be MODIFIED TO SPECIFICALLY DOCUMENT AN INTENTION TO BE JOINT APPLICANTS. I think that is the safest thing to do. If the agencies issue guidance later that is different, I can always change my forms. Easy for me to do as they are Adobe Acrobat forms posted on our Intranet.
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Dolly Nugent
CRCM
Opinions expressed are my own.
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