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#1337647 - 02/04/10 06:22 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans trout22
FABCompliance Offline
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Joined: Nov 2009
Posts: 28
Illinois
Since Harland is working on the "approval" and "final" disclosures we went ahead and created our own initial disclosure in Crystal Reports. If anyone would like a copy I would be happy to send it to them. Also if anyone else has created their own initial disclosure I would be curious to see what that looks like.

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#1337700 - 02/04/10 07:00 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans FABCompliance
raitchjay Online
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OK
My take has been that the initial disclosure isn't needed unless you have a "formal" secondary education loan program. Anybody agree/disagree?
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#1337859 - 02/04/10 08:32 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans raitchjay
pacar Offline
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Posts: 320
raitchjay, I tend to disagree.

The application disclosures referred to in 226.46(d) only speak of an exemption for multi-purpose loans. See 226.46(d)(iii).

I've looked at the commentary to this section, as well as the document announcing the final rule (and all the supporting comments), and I have yet to see anything that exempts us from having to complete the initial disclosures unless it's a multi-purpose loan.

My take on this is even if we don't have a "formal" education loan program, if "Student Jack" approaches "Lender John" and says he needs $1500 for room & board expenses, it's a PEL and we need to give the initial disclosure at application. If "Student Jack" said he needed $1500 for room & board expenses AND a ring for his girlfriend, it's still considered a PEL but because it's a multi-purpose loan the initial application disclosure would not be needed. The approval disclosures and ROR would apply regardless.

The same would apply if it was “Mom Jill”. If she indicated at application that the loan was soley for her son’s room & board at school, we’d have to give the initial disclosure, but if it were for room & board AND to pay off her car we would not. Again, approval and ROR would apply.

Is anyone else reading the Reg differently? Has anyone found some sort of exemption if the borrower is not a student?

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#1337898 - 02/04/10 08:56 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans pacar
Comply Wren Offline
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Joined: Dec 2009
Posts: 72
I tend to agree with raitchjay. When I read the commentary to 226.46(b)(5), it says:

A creditor will not know before an application is received whether the consumer intends to use the loan for postsecondary educational expenses. For this reason, the creditor need not provide the disclosures required by 226.47(a) on or with teh application or soliciation for a loan that may be used for multiple purposes. HOWEVER, IF THE CONSUMER EXPRESSLY INDICATES THAT THE PROCEEDS OF THE LOAN WILL BE USED TO PAY FOR POSTSECONDARY EDUCATIONAL EXPENSES, THE CREDITOR MUST COMPLY WITH 226.47(b) AND (c) AND 226.48 (emphasis mine). For purposes of the required disclosures, the creditor must calculate the disclosures based on the entire amount of the loan, even if only a part of the proceeds is intended for postsecondary educational expenses.

In other words, we don't have a formal student loan program. But we offer unsecured loans that a student will sometimes use for school expenses. But the unsecured loans can also be for anyone, any purpose. We wouldn't know until (or unless) the borrower said it was an education loan that we needed to provide disclosures. So, as I read the commentary, I would only have to provide the Approval and Final disclosures, not the application one. However, if it was for let's say, fixing a car and books for college, I would give the disclosures.

However, I see nothing exempting non-student borrowers. Maybe someone saw something I missed.
Last edited by Comply Wren; 02/04/10 09:00 PM. Reason: additional thought
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#1337937 - 02/04/10 09:22 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Comply Wren
pacar Offline
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Agreed, Comply Wren. However, if the loan officer has a conversation with the borrower prior to giving them the loan application and the borrower says the loan will be 100% for qualified education expenses, I believe the initial disclosure would be necessary.

I'm just going to have my lenders stop talking to the borrowers until the application has been completed. smile

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#1337951 - 02/04/10 09:33 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans pacar
raitchjay Online
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OK
I think i would instruct LO's to tell "student jack" that "our institution doesn't make loans with the sole purpose being for postsecondary education, but we can make you a multipurpose loan" smile...i think for practical purposes you could fall back on the "we don't have a student loan program, we can't be aware of what they are applying for until we see the application"...to me the only real solution i know of (short of developing the application disclosure), is to only do "multi-purpose" education loans.
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#1337994 - 02/04/10 10:03 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans raitchjay
rsanders Offline
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Posts: 72
I assume that for the purpose of being exempt from PEL, the definition of open-end credit refers to revolving lines? We currently do not offer revolving lines of credit (only draw notes) so I suppose our only option (to avoid these loans) is to require the applicant to secure the note with a dwelling or real property...correct?

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#1338251 - 02/05/10 02:42 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans raitchjay
Always In Training Offline
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Where the Green Grass Grows
FYI - Harland posted temporary work-around instructions to fill in pre-printed disclosures for fixed rate private education loans based on information in the loan docs until their March 26th software update.

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#1338355 - 02/05/10 03:18 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Always In Training
rsanders Offline
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Joined: Feb 2010
Posts: 72
In addition to my previious question I was also wonder if this applies only to applications taken after 2/14. If we have an application from before 2/14 and it doesn't close until after 2/14 do the rules apply? I would assume that it only applies to new loans, especially since part of the requirement is for disclosures at application.

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#1338359 - 02/05/10 03:20 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans rsanders
Book Nerd Offline
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New England
It only applies to applications taken on or after 2/14.
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#1339112 - 02/05/10 10:10 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans FABCompliance
"Rita" Offline
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Joined: Apr 2008
Posts: 7
Utah, USA
I read your offer on sharing your internally developed disclosure for private education loans, could you send me a copy. I am literally grasping at straws right now. Sorry I am not much help on this whole thing.
jacque@fnbutah.com

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#1339204 - 02/06/10 01:03 AM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans "Rita"
Princess Romeo Offline

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I know a lot of smaller shops are simply going to decline the loan since they do not have the capability of providing the disclosures. So for those places, if someone talks to a CSR or lender and states they need the money for education, it appears that they will need to refuse the application.
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#1339906 - 02/09/10 12:34 AM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Princess Romeo
rsanders Offline
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Posts: 72
So still no answer on whether or not this applies to renewals?

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#1340295 - 02/09/10 06:52 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans rsanders
swiggles Offline
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If you do a new note, yes, it applies. We will be doing modifications of any existing loans for which the original purpose was post secondary education expenses. I think there's another thread on this subject in which one of the gurus answered this question.
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#1340310 - 02/09/10 07:01 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans swiggles
SnuffytheSeal Offline
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State of Confusion
We are also declining to do any closed end loans (not secured by real estate) in which our member indicates that the purpose or any part thereof is for post secondary education purposes.
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#1340325 - 02/09/10 07:11 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans SnuffytheSeal
swiggles Offline
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My colleague made a humerous point. Henceforth, loans for post-secondary education expenses will magically turn into refrigerator loans.
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#1340366 - 02/09/10 07:48 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans BLPage
Trees Offline
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We loan funds through our consumer loan dept.(so not R/E secured) for educ. purposes to the parents and not the actual students. This being the case, does the new disclosures, etc. apply??

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#1340376 - 02/09/10 07:55 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans swiggles
SnuffytheSeal Offline
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State of Confusion
Originally Posted By: swiggles
My colleague made a humerous point. Henceforth, loans for post-secondary education expenses will magically turn into refrigerator loans.


You jest but I can hear it now..."oh, Mr/Ms Swiggles, you intend to use the proceeds of this car loan for Beauty School? I'm sorry, to buy a new refrigerator? That will be no problem"
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#1340378 - 02/09/10 07:57 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Trees
SnuffytheSeal Offline
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Originally Posted By: Trees
We loan funds through our consumer loan dept.(so not R/E secured) for educ. purposes to the parents and not the actual students. This being the case, does the new disclosures, etc. apply??


The test is the purpose not the intended user. So yes, if they are using it for higher education, whether for personal use or no, the disclosures apply.
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#1340392 - 02/09/10 08:13 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans SnuffytheSeal
swiggles Offline
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swiggles
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Originally Posted By: respa queen
Originally Posted By: Trees
We loan funds through our consumer loan dept.(so not R/E secured) for educ. purposes to the parents and not the actual students. This being the case, does the new disclosures, etc. apply??


The test is the purpose not the intended user. So yes, if they are using it for higher education, whether for personal use or no, the disclosures apply.


Talk them into buying a refrigerator instead. wink
(just funnin'....not serious.....however this IS what I expect will go on undetected behind the scenes)
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#1340411 - 02/09/10 08:26 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans swiggles
Trees Offline
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And then some. Fridges and vacations.........

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#1340422 - 02/09/10 08:34 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Trees
HRH Okie Banker Offline
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Oklahoma
I bet my favorite starts popping up again: Personal Expenses
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#1340436 - 02/09/10 08:43 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans HRH Okie Banker
HRH Okie Banker Offline
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Oklahoma
If I read this correctly - I have to hold your $10,000 6% rate open for you for 30 days to decide if you want that and to allow you to shop around for other offers. I can't change anything during that time, except the rate should it be floating and the index changes. Should you come back in and request $15,000 I have to send new disclosure, which also shows that the rate for this offer is 7%.

I have to keep that $10,000/6% offer open in case you don't accept the $15,000/7% and I have to keep the $15,000/7% offer on the table for the 30 days it might take you to decide which you want.

But the $10,000/6% can expire during that $15,000/7% 30 day decision making periord, correct?

Alrighty then. We are having fun now!
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#1340467 - 02/09/10 09:08 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans HRH Okie Banker
Princess Romeo Offline

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For Credit Unions using Open-end LoanLiner Advances for your consumer loans, and word from CUNA on the applicability?

I am thinking that since these are "technically" open-end loans, they are exempt from the requirements.

I DO have a love/hate relationship with LoanLiner.
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Regulations are a poor substitute for ethics.
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#1341137 - 02/10/10 06:05 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Princess Romeo
ktac MITCH Offline
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Posts: 1,813
Giant side of TX
Since our loan software provider has said they won't support. . . . I have developed the "At Approval" and "Final" disclosures in excel.
Using the Model form and Examples and the section of Reg Z as a guide.
So -
1. Ours does not have var. rate info because we will be doing fixed rate loans
2. does not have defered payment info because that is not an option for our loans
3. I left off the statement of "you may have to repay this loan even if I file bankruptcy". Because that is just flat not true for our type loans (Not Student Loans)

If anyone would like to see my creation send me a PM with your email & I will share my new toy laugh
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