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Lending Disclosures at a Glance
by Mary Beth Guard, BOL Guru

There are more than two dozen different federal disclosures or documentation compliance requirements that can be applicable in the lending context. Sometimes, an employee is taught what to give or complete (or software makes it easy by spitting out the right documents), but the employee doesn't know the source of the underlying requirements. This chart details each of the possible federally-mandated lending disclosures and documentation requirements, broken down by law or regulation.

  1. Records Required under the Bank Secrecy Act
    (does not matter whether the credit is to a consumer or a business)

    • Record of credit over $10,000 not secured by real property
      On each extension of credit not secured by an interest in real property that is in an amount in excess of $10,000, a financial institution must make a record of the name and address of the person to whom the extension of credit is made, the amount thereof, the nature or purpose thereof, and the date thereof. 31 CFR 103.33

    • CTR for loan payments in cash over $10,000
      When a payment of more than $10,000 is made in cash on a loan, a Currency Transaction Report is required to be filed. 31 CFR 103.22(b)

  2. Disclosures/Records Required under Regulation Z
    (applies only to applications/loans to an individual, primarily for a personal, family or household purpose)


    • Early TIL disclosures
      (only when it is a residential mortgage transaction covered by both Reg Z and RESPA) 12 CFR 226.17(f) and 12 CFR 226.19(a)


    • Material disclosures
      12 CFR 226.5 & 226.6 (open end credit); 12 CFR 226.5a & 226.6 (credit cards); & 226.5(b) & 226.6 (home equity plans); 12 CFR 226.17 (closed end credit)


    • Right of Rescission notice
      (only when a security interest is or will be retained or acquired in a consumer's principal dwelling in a transaction that does not involve financing the acquisition or initial construction. Applies in a refinance by the same creditor only if new money is involved) 12 CFR 226.15 (open end credit); 12 CFR 226.23 (closed end credit)


    • ARM loan disclosures
      (transaction secured by the consumer's principal dwelling with a term greater than one year where the APR may increase after consummation) 12 CFR 226.19


    • Home Equity Brochure and other HELOC disclosures
      (required only on home equity lines of credit covered under Regulation Z) 12 CFR 226.5b (HELOCS)


    • Variable rate disclosures
      (for HELOCS that are variable rate 12 CFR 226.5b(d)(12))

  3. Disclosures/Records Required under ECOA/Regulation B
    (applies to all credit transactions)


    • Written application required
      (A written application is required for an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling) 12 CFR 202.5(e) 12 CFR 202.13


    • Notice of incompleteness
      (or, in the alternative, a notice of action taken) 12 CFR 202.9(c)


    • Notice of Action Taken
      12 CFR 202.9(a)(2) (consumer applicants); 12 CFR 202.9(a)(3) (business applicants)


    • Statement of reasons for adverse action or notice of right to obtain a statement of reasons 12 CFR 202.9(b)


    • Copy of appraisal or notice of right to receive a copy of appraisal
      Applies any time an appraisal report is used in connection with an application for credit that is to be secured by a lien on a dwelling. 12 CFR 202.5a

  4. Disclosures/Records Required under Flood Hazard
    (applies when you are making, increasing, extending or renewing credit secured, or to be secured, by improved real estate or an affixed mobile home, regardless of the purpose of the loan or type of borrower/applicant)
    • Standard Flood Hazard Determination Form (internal only)
      12 CFR 208.25;


    • Notice of Flood Status
      Required only if the SFHDF indicates the property is in a flood hazard zone. 12 CFR 208.25;


    • Forced placement notification
      12 CFR 208.25;


    • Notice of servicer's identity (furnished to Director of FEMA)
      12 CFR 208.25;


    • Notice of change in servicer (furnished to Director of FEMA)
      12 CFR 208.25;


  5. Disclosures/Records Required under RESPA
    (applies when the loan is to an individuall, primarily for a personal, family or household purpose and secured by a mortgage on real property on which there is, or will be following the making of the loan using the proceeds of the loan, a 1- to 4-family dwelling)

    • Mortgage Servicing Disclosure
      (Not required on subordinate lien loans or HELOCS) 24 CFR 3500.21


    • HUD-1
      (Not required on HELOCS) 24 CFR 3500.8


    • HUD-1A
      (Not required on HELOCS) Used for refinancings, but creditor may elect to use HUD-1 instead. 24 CFR 3500.8


    • Settlement Costs booklet
      (aka "special information booklet") 24 CFR 3500.6


    • Good Faith Estimate
      24 CFR 3500.7


    • Required Provider Notice
      24 CFR 3500.7(e) [On HELOCS, it is sufficient to supply the HELOC disclosures under Reg Z, Section 226.5b at the time the borrower applies for such loan shall be deemed to satisfy the requirements of this section.]


    • Affiliated Business Arrangement Disclosure
      24 CFR 3500.15


    • Notice of Transfer of Servicing Rights
      24 CFR 3500.21(d)


    • Initial escrow account statement
      24 CFR 3500.17


    • Annual escrow account statement
      24 CFR 3500.17


  6. Disclosures/Records Required under Fair Credit Reporting Act
    (applies only in connection with applications/extensions of credit to consumers)

    • FCRA notice
      Required if credit is denied in whole or in part based upon information contained in a consumer report. 15 U.S.C. 1681m


  7. Disclosures/Records Required under Regulation AA
    (applies only in connection with applications/extensions of credit to consumers)


    • Notice to Cosignor
      Must be given in writing to the cosigner prior to becoming obligated 12 CFR 227.14


  8. Disclosures/Records Required under Privacy Regulations
    (applies when the applicant/borrower is an individual and the purpose of the loan is primarily personal, family or household)


    • Initial privacy notice
      Must be provided not later than when you establish a customer relationship 12 CFR 216.4


    • Annual Privacy notice
      Must be provided at least once in each 12 month period during the continuation of the customer relationship. 12 CFR 216.5


    • Revised privacy notice
      Required only if you change your privacy practices. 12 CFR 216.8


Related Product:
Lending Compliance Matrices

The original version appeared in the March 2002 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com






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