Auditors are asking us for a copy of our "Notice to Co-signers" that would be given to co-signers at application.

We really don't do these kinds of loans...we would require they be a co-applicant.

I am being told that we have to have this notice, in the event that we take an application and they mark the additional applicant as a co-signer.

But again, we don't do these types of loans, so can we just say, sorry we don't have one?

First, I'm not aware of a Notice to Co-signer document that is given at application. There is one that is required to be given before the co-signer signs anything making them liable for the loan.

Second, even if you call the customer a co-applicant - if they meet the definition of co-signer, per Regulation AA they are consdiered a co-signer.

We do not utilize the separate document. Our Notice To Cosigner is on the Consumer note above the signature lines.

Right, Duchess Skittles!! We were hit with violations for this from auditors. They had no trouble finding loans where the "co-borrower" was really a co-signer based on the loan purpose and collateral. Our software only produces the notice if the obligor is set up within the system as a co-signer. I had to do Reg AA training to help lenders know the difference.

Obviously we are needing Reg AA training....aside from trying to read the reg myself, is there a webinar or other resource to get clarification on what they are looking for?

Under Federal Law there is no Notice to Co-signer at the time of application, however FL may have a statute that requires one.

As long as the notice is on your note as you described you would be in compliance with Reg. AA.

You may have to seek clarification from the auditor.

PS. Reg AA is not a bad read.

http://www.bankersonline.com/regs/227/227.html

I was hoping you would chime in...I know I can count on you!

You will love this.....my processor sends me an e-mail just now:
"Reg B requires that we have a Notice to Cosigners notice. In which a copy of the notice is given to the cosigner to sign."

I am sorry, but am I missing the boat on something? Reg B?

Sigh. No, it's not Reg B (as you know.)

I sort of like Reg AA, it's fairly neat and tidy, as regs go.

I did an "Applicants and Applications" webinar in 1/08 and covered this exact topic. You can find more info here:
http://www.bankersonline.com/bankerstore/index.php?main_page=product_info&products_id=1103

Are they talking about the "intent to apply" jointly rather than a "notice to co-signer"? Otherwise someone is really confused.

David, thanks for the resource!



The processor who brought this to our attention said he was asked by an auditor for the Notice to Co-signer given at application - when it's not an application for joint credit, but for an application with one borrower and a co-signer. More than likely the auditor didn't say "at application", that was probably added by the processor.

Or notice is located on the note above the signature line. We do not have a separate notice of any kind. I think we are okay, but this has definitely uncovered the need for more training on the subject.

Thanks!