Say we have a farmer and wife that have an operating line of credit that renews annually. They submit financial statements to the bank whenever they are completed. When the operating line comes up for renewal if the financial statement in the file is newer than 6 months we just automatically renew the loan. They still have to come in the bank and sign all new loan papers. Would you have to get a signed intent to apply jointly for credit in this situation?

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Would you have to get a signed intent to apply jointly for credit in this situation?

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Under the current interpretations I would say yes. I saw something on this the other day but can't locate it. I don't remember if I saw it on BOL or something else I was reading, but it referred to the renewal of a balloon mortgage and the fact that only one party may wish to renew the balloon, I think the same could be applied to your situation.

I would have something in the file showing intent. You are supposed to document it in the file that they applied for joint credit. Given the revision's elimiation of joint financial statments as evidence of intent, you do not have it. I would want that in my file somewhere going forward.

I'm going to get involved in this question for training (myself) purposes.

My question would be, is the farm a Partnership, Corporation, LLC or is it just Mr. and Mrs. Farmer? If Mrs. Farmer is a partner, member or officer, my understanding is that having a completed and signed Borrowing Resolution/Authorization in file would aleviate your current fear. As in the recent Compliance Action article, "Checking Applicants and Signatures"

If they are just individuals I punt and refer to our esteemed colleagues for help.

I say yes and partially for this reason. You will have a new obligation. If one person had another to help them qualify for the prior loan, and they now meet your criteria alone, you need to release that other party. Having the "joint intent" statement helps relieve this pressure as well as meet the new criteria.