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#1345329 - 02/18/10 04:35 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Bville
swiggles Offline
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....just my opinion.......I think if you do anything to a pre-existing PEL, it's still a PEL.....disclosures required.
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#1345623 - 02/18/10 08:09 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans jmd
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Originally Posted By: jmd
In the case of an application received via the mail, or dropped off, would you need to send an adverse action letter to the customer? Can you decline based on the fact that you do not offer the product?


I don't see that you would have any other choice unless you are prepared to provide the required disclosures.
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#1345638 - 02/18/10 08:17 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans ahou
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Originally Posted By: ahou


So if the loan officer takes an application in-person(interviews & completes) and the consumer states the purpose is to finance tuition or buy books, we don't have to give the application disclosure?


By definition, an "application" disclosure is one that is provided WITH the application that is given to a consumer to fill out. The regulation says that if a lender has an an application form that can be used for multiple purposes, then the Private Education Application disclosure does not have to be provided.


It's a small bone that was thrown to us by the Feds for those places that are not specifically targeting student loans.

But if you want to go ahead and prepare Application disclosures and provide them for your loan officers along with training on when they must provide these disclosures and when they shouldn’t, I’m not going to get in your way.

If you do so, then you will need to follow up and audit to be sure that the loan officers are doing this, and you may wind up with some confused customers who might get these even though they only want to buy a car and are not going to school.

Seriously – how often do you think this situation is going to happen? Let’s not over-think this and get carried away.
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#1345748 - 02/18/10 09:51 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Princess Romeo
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And for those wondering what the Self-Certification form looks like (the one your Private Education Loan borrower needs to complete) - here it is:

http://www.ifap.ed.gov/dpcletters/attachments/GEN1001A-AppSelfCert.pdf

And you can also access a Word version as well as the announcement about the form at:

http://www.ifap.ed.gov/dpcletters/GEN1001.html
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#1352069 - 03/04/10 01:08 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans BLPage
SnuffytheSeal Offline
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Originally Posted By: BLPage
I've read some of the legislation --- Staff Commentary is the best to start out with, so ------

Yes, that would apply.FDIC Official Staff Commentary 46(b)(5) Private Education Loans, Para 1....."A private education loan is ..... as well as loans extended to consolidate a consumer's pre-existing private education loans."

In fact, the next paragraph "2. Multiple Purpose Loans, i- Definition and ii-Coverage" confirm that a simple personal loan request, even when only part of the proceeds will go towards postsecondary educational expenses, Is Considered Part Of This Regulation.

Now ---- I have no idea HOW I am going to learn about 'self-certification', Perkins, Stafford, Plus Loan Programs so I can train our loan officers. Any Ideas.....? I'm counting heavily on BOL and a webinar to give it all to me !!


We will not be offering higher education loans - if the borrower indicates that that is the purpose, we will deny the loan and offer them (assuming they qualify) a line of credit.
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#1354535 - 03/09/10 07:18 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans SnuffytheSeal
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Sorry but I'm still confused on the renewal of an existing loan for student loan purposes. If the bank extends a loan for colleged expenses, would the renewal trigger the new disclosures? In this case, the existing loan would not be replaced with a new loan - just extended. The commentary to Reg. Z states: A private education loan is one that is extended expressly for postsecondary educational expenses. The term includes loans extended for postsecondary educational expenses incurred while a student is enrolled in a covered educational institution as well as loans extended to consolidate a consumer's pre-existing private education loans. Since the bank is not extending a loan to consolidate the existing note, my interpretation is that a renewal would not trigger the new disclosures?

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#1354536 - 03/09/10 07:21 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Valley Girl
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OK
I agree with your interpretation.
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#1354586 - 03/09/10 08:26 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans raitchjay
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Thank you!

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#1354904 - 03/10/10 02:27 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Valley Girl
comp123 Offline
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I have read through the postings and what I thought I understood, I have gotten confused. Would someone let me know if they agree with the following: We use multi-purpose applications so no PEL disclosures required. If we receive an application that indicates PEL purpose, we can give adverse action based on not offering that product. If we renew (not replace) an existing PEL loan (as now defined), nothing needs to be done. If we refinance (replace note), then disclosures come into play. Have I simplified it too much and I should start worrying a little more??

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#1354934 - 03/10/10 02:44 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans comp123
manylayers Offline
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Comp...that all sounds right.

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#1355210 - 03/10/10 05:45 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans manylayers
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I contacted one of our regulators about the approval disclosures on multi-purpose applications. I stated that we don't offer "student loans" per se, but under the regulation, we could end up with a HEOA loan. I asked if we could skip the application disclosures, since the application can be used for multiple purposes, and we won't necessarily know up front if the loan is for educational purposes.

He stated that if the application states that the purpose is solely for educational purposes, then we still have to provide the application disclosures. If the loan purpose is broken up between educational and something else, then the application disclosures are not required.

I still don't agree with his answer, and I even quoted the part of the regulation that backed up my interpretation. I'm curious to know if anyone has received a different response from their regulator?
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#1355223 - 03/10/10 05:56 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Book Nerd
swiggles Offline
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Originally Posted By: Laffy Taffy
I still don't agree with his answer, and I even quoted the part of the regulation that backed up my interpretation. I'm curious to know if anyone has received a different response from their regulator?


That's why we don't ask our regulator questions....... wink
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#1355237 - 03/10/10 06:12 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans swiggles
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OK
I don't agree with your regulator either.
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#1356345 - 03/11/10 10:03 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans manylayers
ramona Offline
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Any thoughts on the following scenario:
-an application is received for the purpose of paying off an existing student loan made through a local university and a credit card. Considered a PEL?
-The individual is still in school, considered a PEL?
-The individual is no longer in school, considered a PEL?

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#1356442 - 03/12/10 05:40 AM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans ramona
Princess Romeo Offline

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Originally Posted By: ramona
Any thoughts on the following scenario:
-an application is received for the purpose of paying off an existing student loan made through a local university and a credit card. Considered a PEL?
-The individual is still in school, considered a PEL?
-The individual is no longer in school, considered a PEL?



Yes
Yes
Yes
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#1356514 - 03/12/10 02:14 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Princess Romeo
ramona Offline
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Thought more about this last night...Regarding the last scenario, the individual is no longer in school: If the individual is no longer in school and the purpose is not for "Expenses for postsecondary educational cost of attendance, as defined under Section 472 of the Higher Education Act of 1965" which indicates references to the "student" carrying an academic workload determined by the institution, which throughout the verbiage is referred to as either full-time, half-time, or less than half-time, Reg Z would not apply. Additionally, in order to consummate the loan, it is required to have a Self Certification Form which is defined in 226.48(e) "For a private education loan intended to be used for postsecondary educational expenses of a student while the student is attending an institution of highter education, the creditor shall obtain from the consumer or the institution of higher education, the form developed by the Secretary of Education under section 155 of the Higher Education Act of 1965, signed by the consumer, in written or electronic form, before consummating the private education loan". If the borrower is no longer a student, the self-certification form will not be available, thus the loan could not be consummated. In this case, since the purpose is to payoff a existing student loan and credit card, by a consumer who is no longer in school, it appears the applicability of Section 226.46 of Reg Z does not exist. I seem to overanalyze everything!! Any feedback is appreciated.

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#1357482 - 03/15/10 03:21 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans ramona
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We administer a 0% student loan program for a foundation. It allows the borrower $3,000 for the 1st year. Then the next year they may reapply for an additional $3,000. When they do, the balance from the previous year rolls into the new loan balance, say $5,200 total loan balance. A new Note is signed each time for the cumulative loan amount. Do we need to disclose the cumulative loan amount for the closing for the additional funds?

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#1357783 - 03/15/10 08:21 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans ramona
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Originally Posted By: ramona
Regarding the last scenario, the individual is no longer in school: If the individual is no longer in school and the purpose is not for "Expenses for postsecondary educational cost of attendance, ..."


That's a nice thought, but it specifically mentions that refinances of previous educational loans, consolidations ARE covered. I think that means, even if they aren't in school anymore.

Originally Posted By: Compliee
Do we need to disclose the cumulative loan amount for the closing for the additional funds?


The way I read the reg. Yes. The full new loan amount would need disclosures.

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#1358249 - 03/16/10 05:45 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Always In Training
ramona Offline
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I agree that if the loan is refinanced and the individual was still in school, it would be covered, however; as stated further in my post from 3/12/10, how would we be able to consummate the loan without the Self-Certification Form, since the individual is no longer a student? The purpose of this loan was to payoff a previous student loan and payoff a credit card.
Last edited by ramona; 03/16/10 05:46 PM.
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#1358279 - 03/16/10 06:13 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans ramona
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From Reg Z 226.48(4)(e) Self-certification form. For a private education loan intended to be used for the postsecondary educational expenses of a student while the student is attending an institution of higher education, the creditor shall obtain from the consumer or the institution of higher education the form developed by the Secretary of Education under section 155 of the Higher Education Act of 1965, signed by the consumer, in written or electronic form, before consummating the private education loan.

Underlined emphasis is mine. If they aren't enrolled, but they still have student loan debt they want to consolidate or PEL loan they want to refi -- you have to give them disclosures and you wouldn't need the self-certification form.

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#1360780 - 03/19/10 03:24 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Always In Training
N. Darby Offline
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I spoke with our regulators yesterday about the application disclosure issue and was told that since we use a "general loan application" form and not one specifically tailored for a PEL, then the application disclosure is not required, but the approval and final disclosures are.

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#1360887 - 03/19/10 04:21 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans N. Darby
Sheldon Hendrix Offline
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It appears that the solicitation/application disclosures are aimed at institutions that provide a certain loan as a "product" for education purposes. After studying the Reg., and the form, this is the only reasonable conclusion I can come up with. We are not going to provide the solicitation/application disclosures, but will be providing the final two.

“Coverage. A creditor generally 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 the application or solicitation for a loan that may be used for multiple purposes. See § 226.47(d)(1)(i). 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.”

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#1361820 - 03/22/10 06:10 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Sheldon Hendrix
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Rescission question...

Reg. Z definition of a business day says use the general definition. But for purposes of rescission under 226.15, 226.23 and 226.19(a)(1)(ii), 226.19(a)(2), 226.31 and 226.46(d)(4) use the more specific definition.

226.46(d)(4) talks about the receipt of mailed disclosures and when to consider them recieved if mailed.

So am I correct in saying that the rescission period for higher education loans uses the general definition of business day and not the traditional specific definition?

This is also backed up on page 41198 of the federa lregister that includes the "preamble" to the higher ed rules. "The Board is adopting the general definition of 'business day' for all other purposes in 226.46,47 and 48, including for measuring the period of time in which the consumer may cancel the loan.

Has anybody else caught this, or am I totally wrong?
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#1362141 - 03/23/10 12:28 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Compliance Chick
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I trained my lenders not to count Saturday as a rescission day for Private Education Loans. I read it somewhere, but of course can't find that particular point at this minute.

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#1364344 - 03/25/10 08:55 PM Re: FRB 3/11 ANPR Reg Z Amend on College Student Loans Bville
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I thought I was clear on what types of loans were covered. However, now that this is effective for a month+ I am getting some questions from lenders. I went back to do some research and found this thread. It mentions several places that unsecured lines of credit are not covered. I reread the definitions. 226.46(b)(5)(iii)states and I quote
Quote:


(5) Private education loan means an extension of credit that:

(iii) Does not include open-end credit any loan that is not secured by real property or a dwelling;
Quote:


Is this missing a word or two? Plus there is a double negative as published so this seems to say it would apply to real estate secured loans, which I know was not the intent. I tried to find a discussion in the commentary or the background material from the comments to the propoal, but I must be missing it (too late in the day?).

Please let me know where or how you determined that the regulation disclosure rules do NOT apply to any loan secured by real estate or a dwelling or to any open end line of credit or to any credit card advance.

Thanks.

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