I put in a call myself yesterday. I sent the person I spoke to the press release from the FRB and she said she would get back to me. I haven't heard anything. You are probably right!

More than likley it will be offered as an added "module", so you will probably have to ask yourself if it's worth the money just to make a handful of personal loans.

Too bad banks don't have the LoanLiner (CUNA) product to offer - it gets you out of that whole mess sine LoanLiner is "technically" an open-end product.

OTOH, you could come up with an open-end personal loan that you would review annually to determine if the borrower remains eligible.

With respect to credit cards, don't forget that you cannot grant one to a person under 21 unless they have a source of income sufficient to repay or they get a co-signer.

Go the credit card product route as opposed to the HELOC route, far less likely to encounter disparate impact that way. Commercial solicitation deleted. If you want to advertise on BOL, please contact Tobi@BankersOnline.com.

Caveat with the credit card route - under the credit card act, you cannot grant a credit card to anyone under 21 unless they have sufficient income or a co-signer.

While this actually should be common sense (don't grant credit to someone who is unable to repay), the whole issue of granting credit cards to anyone under 21 is likely to be a HOT BUTTON issue.

I received feedback from Harland. HFS will be updating LaserPro to support the approval and final disclosure forms for private education loans. They do not intend to support the application and solicitation disclosure, which is intended to be used when providing an application that is specific to private education loans or when soliciting customers specifically for private education loans. They will support only general consumer loans where loan funds are used, in whole or part, for funding postsecondary education expenses and the loan is not otherwise exempt from coverage as a private education loan (e.g., the loan is secured by real estate). They are attempting to release the disclosures are in the February 12, 2010 release of LaserPro. However, at this time, they cannot commit that the private education loan disclosures will be available until the March 26, 2010 release. They will know more in the next few weeks regarding whether they will have these disclosures in the February 12, 2010 release.

Hi All,

I have a question regarding the college student loan changes that take effect in February. If we did a loan(for college expenses that meet the requirements for the new changes) before the changes take effect and the renewal of the loan comes up after the changes have taken effect, due the new rules apply to renewals? Is there a grandfathering in of these loans or would the new disclosures need to be given. I have looked at the regulation but probably missed it.

Thanks for your help.

How about this? We write into loan policy that we do not make "private education loans" as defined by "blah, blah, blah." If someone applies for a loan that meets the description, we issue a combined decline/counteroffer. Decline the loan because we do not offer the product, counteroffer with a personal line of credit, credit card or loan secured by real property.

How about "While we would love to be able to accomodate your request, the federal government now requires extensive disclosures for this type of loan that are beyond our capacity to produce. Therefore we can only consider your request as a personal line of credit, credit card, or loan secured by real estate.

"If you find this disturbing, please be sure to notify your local congressional representative."

Can you tell I'm in a mood today......

A couple of questions regarding the disclosures:

1. What is the waiting period before consummation can occur?

2. Why would the FED devise such an onerous set of rules when our children need all the financial assistance they or their parents can get in order to get a higher education. Why such a dis-incentive to lend? Is there an alternative agenda by the FED to push all HEL through the government programs?

Just wondering why the FED is all caught up in "consumer protection" now that they have been called on the carpet. Just more "CYA" I guess.

******************************
Appears this may be another round for the FED in knocking us out of the lending market, but also limits the availability of credit to the consumer, like HPMLs, great job FED.

i was looking at this stuff earlier today...i don't think there is any waiting period for consummation....just the right to cancel, 3 day waiting period until disbursement can occur.

And thus was born my signature line - these rules came about because a minority of lenders abused legal loopholes to rip off consumers. It's why we have Rescission and APR's in the first place.

Can I interest anyone in aluminum siding?

******************************************************
Rather than issuing all of these onerous regulations and perhaps creating a whole nother agency to enforce them, I wonder if would be more efficient and cost effective to simply have a Consumer Resolution Agency where aggrieved consumers can take their Predatory Loans and get relief under general Regulation AA principals.

No more outrageous penalties because of a technical and minor error, but if someones social security check gets swallowed up by a PayDay lender, the "CRA" could negate the whole thing.

I find it interesting that short term emergency loans by colleges and universities are exempt but the same loans by banks are not.

The folks that are in a world of hurt right now are the university credit unions. The credit unions would make relatively low-cost loans to help students continue attending the university, and the students became members and got other financial products and everyone was happy.

Not so much now.

Would anyone be willing to share their plans for the disclosures - specifically the form required at application? My understanding is that Harland/Laser Pro is working on updating their software to account for the 'approval' and 'final' disclosures. I'm trying to decide how to tackle the initial disclosure - either attempt to create a 'substantially similar' copy using the model (though the calculations may be tricky), or shopping for new software, etc...

I suspect a lot of folks are planning to simply deny the loans with the reason "We do not grant credit under the terms requested for the purpose" or words to that effect.

Or perhaps more aptly put "We are unable to grant credit for the requested terms and purpose due to new federal restrictions on loans for education."

It will be interesting to see how the regulators look at that. Could it have a disparate impact? A bank should have the business necessity documented and ready to go if so.

Would someone please direct me to the location in the FR regarding circumventing certain requirements? I've seen several references to it, but cannot locate. Thanks!

There are a lot of small shops out there that simply will not have the wherewithall to provide those disclosures. I guess their only other option it to discontinue offering closed-end consumer credit. Is that what the regulators really want?

It appears that may be the unintended case - along with mortgage lending.....

[/quote}Would someone please direct me to the location in the FR regarding circumventing certain requirements? I've seen several references to it, but cannot locate. Thanks! [/quote]

I'm also looking for this. What would constitute "circumventing"? If the loan request includes some money for college expenses and the lender states that they would have to do that request secured by real estate, is that circumventing?

Thank you.

We typically do not make loans for private education purposes in house. we have a company that handles all disclosures.

If for some reason we would do one in house, what disclosures will need to be given?

There are 3 disclosures required: one at application, one at approval, and one final disclosure. These model forms are available using the following link

http://www.federalreserve.gov/newsevents/press/bcreg/20090730a.htm

We use Harland/Laser Pro. I believe someone contacted them (earlier in this post or elsewhere on the message boards) and relayed the info that they are looking to add to their disclosures in their next release - due out Feb. 12th? However, this may cover the approval/final disclosures but we are still unsure how to proceed with the generation of an application disclosure. There are Loan Cost Examples (similar to a TIL box) and Current Interest Rates by Program Type (for the Federal programs) that seem to be very comprehensive to keep accurate/updated. I'm not sure it can be done without software - at least not very easily...

A couple of people have asked about the multi-purpose issue, and here's what it says (emphasis added):

Do you agree that our not offering the "private education loan" (since we can yet do the disclosures properly) falls under the adverse action exclusion in 202.2(c)(v) ("A refusal to extend credit because the creditor does not offer the type of credit or credit plan requested.) where by we would not have to issue an adverse action letter if an applicat listed some kind of postsecondary education expense as a loan purpose? Couldn't we simply tell the applicant that we do not offer product for that loan purpose except for open-end lines, credit cards, or real estate secured and see if they want us to run the appliation through one of those products?

I just don't see how we can continue to do loans for these purposes. We can not generate the required initial disclosures.

Our LOS will be able to do the 2nd & 3rd round of disclosures, but not the initial. We have no access to any of the information about federal student loan terms similar to what we offer. The 3 of us that do early disclosures are already swamped with new GFE's, about to be swamped with escrow accounts that we've never done before and none of us here are the "experts" that we'd need to be in student loans to do the initial shopping disclosures.