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#1354419 - 03/09/10 05:24 PM Purpose of loan
Multiple Hats Offline
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I know we are required to document the purpose of every loan due to BSA. Are there other regulations that require us to obtain the purpose of consumer loans?

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#1354431 - 03/09/10 05:37 PM Re: Purpose of loan Multiple Hats
Mrs. Rizzo Offline
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Curled up by the fire...
HMDA
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#1354435 - 03/09/10 05:40 PM Re: Purpose of loan Multiple Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Required, no, implied, yes, without the purpose how would you know:

what, if any, early disclosures would be needed

Is the loan subject to HMDa therefore requiring the collection of GMI at the time of application

Is the loan subject to or exempt from Reg Z RESPA, the consumer sales of insurance disclosure, etc.

Do you need to provide the new "education" loan application disclosures.


I could go on but I think you can see the importance of obtaining the loan's purpose at the time of application.


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#1354512 - 03/09/10 07:02 PM Re: Purpose of loan Dan Persfull
CompDat Offline
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Posts: 553
USA
I hate to digress into what is more important than anything else or vice versa, but IMO the Purpose of all loans is pretty important. Why would an FI even make loans if they do not know what they are used for?

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#1354531 - 03/09/10 07:14 PM Re: Purpose of loan CompDat
raitchjay Offline
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Just as a contrarian (and because i really don't know the answer to this)...once it's been determined that a loan isn't to be secured by real estate.....what exactly is it required that a bank know? I guess i'm looking at it this way (and yeah, we have to know if it's a consumer purpose for Reg Z and if it meets a HMDA purpose, i get all of that)....i guess i'm looking at this from the consumer's point of view....if i as a consumer have say a $25,000 CD and i want to use it as collateral for a loan....i answer the questions about real estate, consumer purpose, etc......what privacy do i have as a consumer about what exactly i am going to use the proceeds for? As a consumer, i would look at it like...."i have adequate collateral.....i have more than adequate capability of paying the loan back....why does this bank need to know all the specifics about what the loan proceeds are for?"....I'm not talking about getting a loan to do something like fund the North Korean govt.....but must I as a consumer disclose "i'm paying off my brother's gambling debts"? again...just curious i guess
Last edited by raitchjay; 03/09/10 07:16 PM. Reason: fix typoes
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#1354549 - 03/09/10 07:42 PM Re: Purpose of loan raitchjay
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:
what privacy do i have as a consumer about what exactly i am going to use the proceeds for?


If not secured by real estate and for more than $10,000 none. BSA 103.33.

Also if you want to borrow money from us then you will give us the information we feel we need, you have no right to privacy when requesting a loan or other services from the bank. Your only privacy rights is we don't divulge any NPPI under the rules to an outside source.


Quote:
As a consumer, i would look at it like...."i have adequate collateral.....i have more than adequate capability of paying the loan back....why does this bank need to know all the specifics about what the loan proceeds are for?".


You may be using the money to move from our market area, you may be using the money for criminal defense, you may be starting a business and leaving your employment, you may be getting ready to file bankruptcy (even though you don't state that purpose but we can show you used our proceeds we can then file a fraud claim), you may be using the money for a reason we don't lend for such as maybe a political campaign, you may be borrowing the money to invest in a fraud scam and we have the chance to keep you from losing your money, do I need to go on?
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#1354553 - 03/09/10 07:46 PM Re: Purpose of loan Dan Persfull
raitchjay Offline
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I get your drift Dan...I'm not the BSA guy here, so i'm a little shy on my BSA knowledge......so.....as to my very last question...the answer is...yes? i would have to say this loan is to bail out my brother's gambling losses? (i don't have a brother with a gambling problem, just to confirm smile
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#1354560 - 03/09/10 07:50 PM Re: Purpose of loan raitchjay
raitchjay Offline
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I guess i'm just getting at...if i have good collateral...good income....and i tell you all the things you need to know about what the loan is NOT for.....must i tell you the embarassing thing it IS for?
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#1354647 - 03/09/10 09:33 PM Re: Purpose of loan raitchjay
David Dickinson Offline
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Central City, NE
I agree 100% with Dan. We are entrusting you to pay back money we currently have in our possession. To be diligent, we need to know exactly what the purpose of all loans are for. Not only that, but the bank would not want to be involved in anything unethical or illegal. A specific purpose is always required.

To put it bluntly:
It's our money and you would like some - you'll play by our rules.
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#1354657 - 03/09/10 09:37 PM Re: Purpose of loan David Dickinson
raitchjay Offline
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I don't disagree....was just curious.
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#1354666 - 03/09/10 09:45 PM Re: Purpose of loan raitchjay
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:
To put it bluntly:
It's our money and you would like some - you'll play by our rules.


Or sometimes referred to as the Golden Rule: We have the gold, we make the rules.
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#1355066 - 03/10/10 04:15 PM Re: Purpose of loan Dan Persfull
swiggles Offline
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swiggles
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Originally Posted By: Dan Persfull
Quote:
To put it bluntly:
It's our money and you would like some - you'll play by our rules.


Or sometimes referred to as the Golden Rule: We have the gold, we make the rules.


laugh
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