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#145529 - 01/05/04 06:28 PM
Re: ARM disclosure
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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There's nothing I'm aware of that "requires" you to have a copy in the file, or anything that requires the applicant/borrower to acknowledge they received the disclosure.
I think most banks do keep a copy in the file that has been signed by the applicant/borrower as a "best practice", but it's not a regulatory requirement.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#145530 - 01/05/04 06:39 PM
Re: ARM disclosure
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Gold Star
Joined: Sep 2002
Posts: 445
Dallas, TX
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The Commentary to 226.25 addresses this. We do not require actual copies in the loan file (although I prefer it), because we have examples of our programs and procedures that basically state we always give these program disclosures when a customer requests an ARM.
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#145531 - 01/05/04 07:03 PM
Re: ARM disclosure
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10K Club
Joined: Oct 2000
Posts: 10,180
Toano, VA
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You are required to retain "evidence of compliance" not "copies."
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#145533 - 01/05/04 08:59 PM
Re: ARM disclosure
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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I don't mean to put words in Richard's mouth, but it usually consists of maintaining copies of the forms that have been delivered to the customers over the examination period (not a copy of each one delivered, but a copy of each type that was produced during the exam period), copies of your policies and procedures that show that delivery of the disclosures is required by bank personnel, evidence that you have sufficiently trained your personnel, and your personnel answering the examiner's question right when they ask them about disclosures and delivery of them.
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#145534 - 01/06/04 02:37 AM
Re: ARM disclosure
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10K Club
Joined: Oct 2000
Posts: 10,180
Toano, VA
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Randy- I'd be happy for you to put all those words in my mouth. "Evidence" can be procedures, automated systems, samples of standard forms, training materials and audit/QC results--anything that would lead a reasonable person to conclude that the required actions most likely occurred. Examiners can not set a standard that exceeds the regulation by insisting on signed customer receipts.
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#145535 - 01/06/04 01:31 PM
Re: ARM disclosure
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Power Poster
Joined: Jun 2003
Posts: 7,658
Florida
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One way we have reflected "evidence of compliance" is to list all of the initial documentation provided to the customer on a "welcome" letter. Besides thanking the customer for their business, it indicates which documents are enclosed and also contains the CIP safe harbor notice and other disclosures.
This is our "proof of delivery" to the customer for documents, especially those that are not transaction specific.
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#145539 - 01/06/04 04:26 PM
Re: ARM disclosure
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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If your loan's term is 10 years then IMO the 30 year example is not sufficient.
We have terms of 10, 20 and 30 years on our ARM programs and I have a disclosure for each of these terms (upon advice from the FDIC).
Your ARM disclosures, as I read the OSC to 226.19(b)(2)(viii)(A)(5), must either reflect the actual term of the loan or it must reflect the 5, 15, or 30 year payment example based on the various loan terms outlined in that section.
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The opinions expressed are mine and they are not to be taken as legal advice.
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