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#153544 - 01/26/04 07:16 PM Reg B & joint credit
Anonymous
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Regarding the requirement to document the customer's intent to apply for joint credit at the time of application...
None of our applications have the suggested verbiage from the model forms. I have read that the revised commentary says that creditors have the flexibility to determine the methods used to establish intent to apply for joint credit. Is there an alternative to ordering new forms that will keep us in compliance?

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Lending Compliance
#153545 - 01/27/04 10:06 PM Re: Reg B & joint credit
David Dickinson Online
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David Dickinson
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Central City, NE
Sure. Make up a form like this:

Individual or Joint Credit

I/We are applying for $_____________ on ____________ (date) with XYZ Bank.

( ) I am applying for individual credit in my own name and I am relying on my own income and assets and not the income or assets of another person.

( ) I am applying for individual credit and I am relying on my income or assets, as well as income or assets from other sources.

( ) We are applying for joint credit.

Signature(s)
_________________________________________________________

_________________________________________________________
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http://www.bankerscompliance.com

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#153546 - 01/27/04 10:54 PM Re: Reg B & joint credit
Anonymous
Unregistered

Thanks David. I felt that this would be sufficient since it was at the top of the model disclosures, but it makes me feel more comfortable to hear it from someone else!

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#153547 - 01/28/04 02:03 PM Re: Reg B & joint credit
Anonymous
Unregistered

But I thought there was an argument that having the signed application would be considered enough evidence of intent to apply jointly.

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#153548 - 01/28/04 02:38 PM Re: Reg B & joint credit
Huh? Offline
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Joined: Jan 2004
Posts: 50
Southeast
we had hoped so too but checked with FDIC and Federal Reserve and they said: Having applicants' signatures at the bottom of the application attesting to the accuracy of all information on the form is inadequate . Got to have signature or initials by statement of intent to apply jointly.

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#153549 - 01/28/04 04:26 PM Re: Reg B & joint credit
Anonymous
Unregistered

So what about those of us who take the application over the phone and then deny it? How will we get a denied applicant to sign any kind of form for us?

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#153550 - 01/28/04 04:49 PM Re: Reg B & joint credit
rlcarey Online
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rlcarey
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Galveston, TX
cvc,

How about changing the bottom of your form?

You don't have any worry on denied applications, they are trying to prevent illegal spousal signatures on approved loans. Have them signify intent at closing on phone applications.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#153551 - 01/29/04 04:17 AM Re: Reg B & joint credit
David Dickinson Online
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David Dickinson
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Central City, NE
Quote:

we had hoped so too but checked with FDIC and Federal Reserve and they said: Having applicants' signatures at the bottom of the application attesting to the accuracy of all information on the form is inadequate . Got to have signature or initials by statement of intent to apply jointly.



This is getting blown out of proportion. Challenge your examiners. Here is the Federal Reserve's Final Rule for this change. The following is from section 7(d)(1) on page 111 - in italics (along with my comments - not in italics)

A person’s intent to be a joint applicant must be evidenced at the time of application.
This could be done by signing an application.

Signatures on a promissory note may not be used to show intent to apply for joint credit. On the other hand, signatures or initials on a credit application affirming applicants’ intent to apply for joint credit may be used to establish intent to apply for joint credit. (See Appendix B).
When two people sign an application, then are applying. Why else would they sign the application?

The method used to establish intent must be distinct from the means used by individuals to affirm the accuracy of information. For example, signatures on a joint financial statement affirming the veracity of information are not sufficient to establish intent to apply for joint credit.
This is the reason for the amendment. When a joint financial statement is submitted, you can't assume that all parties that have signed the statement are applying.
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David Dickinson
http://www.bankerscompliance.com

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#153552 - 01/29/04 01:02 PM Re: Reg B & joint credit
Anonymous
Unregistered

I disagree that having phone applicants sign/initial the intent section of an application at closing is a good idea. The rule is to express intent at time of application. Our bank is speaking to all aprties on the phone during the app. process and indicating "verbal" on the signature line to indicate intent was gathered at time of application. Gathering the info at closing is like gathering GMI info at closing...if it's not at time of application, then it's too late.

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#153553 - 01/30/04 05:44 PM Re: Reg B & joint credit
David Dickinson Online
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David Dickinson
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Central City, NE
I agree with Anon's last post. Any other comments on my last comments?
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#153554 - 01/30/04 06:21 PM Re: Reg B & joint credit
Anonymous
Unregistered

I agree. I think an application is different than a financial statement. If they have signed an application, that means they are applying for credit. If they have signed a financial statement they are attesting to the accuracy but not necessarily applying for credit.

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#153555 - 01/30/04 08:13 PM Re: Reg B & joint credit
David Dickinson Online
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David Dickinson
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Central City, NE
Quote:

I agree. I think an application is different than a financial statement. If they have signed an application, that means they are applying for credit. If they have signed a financial statement they are attesting to the accuracy but not necessarily applying for credit.



Perfect!
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David Dickinson
http://www.bankerscompliance.com

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#153556 - 01/30/04 08:33 PM Re: Reg B & joint credit
swiggles Offline
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swiggles
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Quote:

I agree. I think an application is different than a financial statement. If they have signed an application, that means they are applying for credit. If they have signed a financial statement they are attesting to the accuracy but not necessarily applying for credit.




If that was the intent, then why do all the Reg B model application forms contain the "joint application" clause and signature (or initial) lines?

Sorry, David. I do not wish to challenge my examiners.
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#153557 - 01/30/04 10:25 PM Re: Reg B & joint credit
David Dickinson Online
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David Dickinson
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Central City, NE
Quote:

If that was the intent, then why do all the Reg B model application forms contain the "joint application" clause and signature (or initial) lines?



Like the amendments said, to demonstrate a way that it MAY be done.

Quote:

Sorry, David. I do not wish to challenge my examiners.



Then you are in for a very frustrating career. Examiners do not know it all and do make mistakes. I was an examiner - at the beginning of my career when I knew the least. People should have challenged me more.

One of the biggest mistakes most compliance officers make is not challenging the examiners. I'm not saying anyone should be disrespectful, but if you lay down and die, you are asking for it.
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David Dickinson
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#153558 - 02/02/04 08:24 PM Re: Reg B & joint credit
Anonymous
Unregistered

In reference to the posts on this, we received a verbal opinion from the Federal Rserve Sr. Attorney on the subject
and one from a Regional Fair Lending Specialist that said we must get either a signature or initial attesting the evidence of applicants intent to apply for joint credit. We were told that having applicants signatures at the bottom of the application attesting tothe accuracy of all information on the form is inadequate. I am all for challenging the examiners but it seems like in our case, we called the appropriate regulatory agencies and were told it was not sufficient to just have a check box on the form. So if this is not really needed, why were we told this and why does the model form show it. I know model forms are not always required to be used but this is the oral answer we received. Just wanted to pass this along. Also does anyone know why the Freddie/Fannie Residential form is exempt from having to have this???? For us this will now create a whole lot more exceptions that we will have to write the lenders up on. It would be nice if we could get someone from the government or Legal to tell us we did not have to get the sign. or intials but our regulatory folks said yes.

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#153559 - 02/02/04 09:07 PM Re: Reg B & joint credit
straw Offline
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straw
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With all due respect, a verbal opinion isn't worth the paper it's printed on. While the model forms provide "safe harbor", they are not the be all and end all.

The attestation clause in the regulation is merely to make clear that a financial statement does not suffice to indicate intent to jointly apply.

If a joint application, signed by both parties, does not indicate intent to apply jointly, what does?

And if you need to demonstrate joint intent, why are initials, which are easily forged, next to a statement of intent to apply jointly enough. Your examiners may challenge that next year.

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#153560 - 02/02/04 09:38 PM Re: Reg B & joint credit
swiggles Offline
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After reading and re-reading SECTION 202.7 - 7(d)(3.) of the Commentary to Regulation B, I'm finding myself agreeing with David. It really does not say that joint applicants must sign or initial a special place on the application to indicate intent to apply for joint credit. What it says is:
1. A person's intent to be a joint applicant must be evidenced at the time of application.........as opposed to when the loan closes (signatures on a promissory note may not be used to show intent).
2. Signatures or initials on a credit application affirming applicants' intent to apply jointly is acceptable.....as David said, what else could a signature at the bottom of the application signify other than to affirm the intent to be an applicant?
3. The last two sentences of the paragraph are linked....not two separate thoughts. The method used to establish intent must be distinct from the means used to affirm the accurancy of the information. FOR EXAMPLE signatures on a joint financial statement affirming the veracity of information are not sufficient to establish intent to apply jointly.
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#153561 - 02/02/04 09:53 PM Re: Reg B & joint credit
rlcarey Online
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Exactly. The problem with the model form is that the signature at the bottom only attests to the accuracy of the financial information and states nothing concerning the intent of the applicants. That is why the intent to apply it is held out separate on the front of the form. If you had a consumer application designed to attested both to the accuracy of the information and the intent to apply, I think a regulator would be hard pressed to cite you for a violation.

Remember, the intent was to weed out signature violations on commercial type loans where the only signatures in evidence were both spouses on a personal financial statements and there was no application form.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#153562 - 02/02/04 10:23 PM Re: Reg B & joint credit
Anonymous
Unregistered

Are there any new regulators out there that have an opinion on this??? It is frustrating when you call the Fed or FDIC and they tell you this but it is not required. They even said they didn't just recommend it but that we needed the initials to satisfy this requirement. We don't want to do but are wondering what other banks are doing. Any more help, please?

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#153563 - 02/02/04 10:28 PM Re: Reg B & joint credit
swiggles Offline
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swiggles
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Regardless of my opinion in this thread, we WILL be including verbiage and signature lines similar to the model forms..........for now.
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#153564 - 02/03/04 03:30 AM Re: Reg B & joint credit
David Dickinson Online
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David Dickinson
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Glad to see you coming around Swiggles

To further this argument (that you don't need someone to sign the "intent to apply" info if they complete an application), notice Section V of the FDIC's FIL 6-2004 specifically mentions this as applying to "applicants for business lending". It goes on to discuss situations in which a typical application is not taken. THAT IS THE INTENT OF THIS CHANGE.

Randy: When have you ever seen someone sign an application that wasn't applying?
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http://www.bankerscompliance.com

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#153565 - 02/03/04 05:23 AM Re: Reg B & joint credit
Princess Romeo Offline

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Where the heart is
I'm getting to the point of having a video tape of the applicants with each one affirming their intention on the application.

Yeah - it's late, and everytime I think we have this put to bed, the darn Little B keeps getting up for a drink of water.
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#153566 - 02/03/04 01:37 PM Re: Reg B & joint credit
upstateNY Offline
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New York State
Just curious. W don't have commercial loan applications. WOW, bet that's a surprise. What are compliance officers recommending for use in the instance where we have, in the past, only obtained both spouses signatures on the financial statement, but now need to show definite intent? Are you going to use a separate form? Think commercial lenders will go for that?

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#153567 - 02/03/04 02:04 PM Re: Reg B & joint credit
Anonymous
Unregistered

Wish we had a clearer answer. What are some of the banks doing? The FIL-6 does say that just having the signature of two applicants does not show the intent to be a joint applicant. And then it says that if there is no application, a written statement by the applicants would suffice. In other words, what are most of you planning to do with changing your application AND are you planning to draft a separate form for your commercial side with no application. And do nothing for Mortgage if they use the Residential Loan App.????

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#153568 - 02/03/04 02:55 PM Re: Reg B & joint credit
Anonymous
Unregistered

Just thought I would add this. Just talked to an OCC Bank and they were told they had to change their application form to actually have signatures or intitials and are creating a separate form for the commercial lenders to use.
We hate to do all of this as we know it will create numerous compliance exceptions if a lender forgets to get the signature but we don't know what else to do?????

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