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August 5, 2015
HMDA – Beyond the Input
Patricia Cashman

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ABCs of HSAs
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Part I: Flood Insurance - Everything You Need To Know (including June 2015 Rules)
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Automated Monitoring Systems: Implementation to Validation
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MasterCard & Reg E Error Resolution
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#343934 - 04/07/05 10:53 AM Reg O definition...

What is a "guidance line" under Reg O? The reg doesn't define it. Can someone give me a definition on what it is?

Lending Compliance
#343935 - 04/07/05 11:00 AM Re: Reg O definition...
Skittles Offline
10K Club

Registered: 09/10/02
Posts: 12362
Loc: KY
I'll take a stab at this one. I believe a guidance line is a line of credit that is approved at the bank level, but the information is not passed on to the customer. This is helpful when the customer needs a loan quickly, and the loan has already been approved.
'Remember that today while you are safe, comfortable and warm somewhere a Kardashian/Jenner is starving for attention.' TR

#343936 - 04/07/05 11:03 AM Re: Reg O definition...
John Burnett Offline

10K Club

Registered: 10/27/00
Posts: 32406
Loc: Cape Cod
My understanding is that it's contrasted with an "advised" line. An "advised" line involves a commitment to lend and the customer is advised of the commitment and terms. A "guidance" line is an internal agreement that a borrower is "good for" loans up to an aggregate number that is shared internally in the bank, but the customer is not formally notified. There is no commitment, so no "unused commitment" number needs to find its way to the bank's financials, etc.

The guidance line is helpful for junior lenders who aren't involved in the underwriting of a customer's credit, but may be called upon from time to time to authorize a note under a senior lender's "guidance" authority. This provides the customer with service when the senior lender isn't available.
John S Burnett

#343937 - 04/07/05 11:04 AM Re: Reg O definition...

That's kind of what I thought skittles - I just wanted a second opinion. Thanks a lot!

Any contrary views would be appreciated if anyone has any.

#343938 - 04/07/05 11:06 AM Re: Reg O definition...

Thanks John! That definitely clarifies things for me!

#343939 - 04/07/05 12:21 PM Re: Reg O definition...
Razor Offline
Junior Member

Registered: 03/10/05
Posts: 26
Loc: South
We use guidance lines frequently for builders. The board wants to limit the exposure to one builder but not require the lender to bring every request to committee. For instance, we just approved one for a builder that allows the lender to make numerous construction loans, but the total committed amount cannot exceed the amount established by the line. At my previous bank they were adament in further limiting how many of the loans in a guidance line could be spec homes and/or in one subdivision.

Since your subject is Reg O I would advise not exceeding insider limits even though the bank does not have a written commitment. Lender could tell the borrower I always did when I was lending money. I would also get prior approval if necessary.


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