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#1614254 - 10/10/11 09:23 PM
Incomplete Online Application
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100 Club
Joined: Jan 2008
Posts: 242
Minnesota
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If a customer starts an application for a new deposit account online, but doesn't complete it, do we have to send them an adverse action notice for incomplete application or does that only apply to loan applicants?
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#1614267 - 10/11/11 02:37 AM
Re: Incomplete Online Application
Funky Falcon
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10K Club
Joined: Oct 2000
Posts: 10,179
Toano, VA
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A partially completed form--paper or electronic--that is never submitted can't be considered an application for anything.
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#1616192 - 10/14/11 09:29 PM
Re: Incomplete Online Application
Richard Insley
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Adding to Richard's point, you never took adverse action. And for new accounts, that would be due if you used 3rd party info like ChexSystems in your decision process.
If the application was incomplete, but you had enough info to make a decision and used ChexSystems, then you had an app, made a decision and a disclosure would be needed.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#1616216 - 10/15/11 01:53 AM
Re: Incomplete Online Application
Andy_Z
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Joined: Oct 2000
Posts: 10,179
Toano, VA
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I've always seen the "Submit" button as the bright line between doodling and applying. It doesn't matter how much stuff someone compiles on a paper form or e-form. All of that could change--again and again and again before the customer decides to click the button that presents the data to the bank. Or, the customer could decide to abandon a partially completed form and go across the street to do business.
I have a problem with the practice of pulling any form of credit score or report until the customer clicks the Submit button. That would be comparable to pulling credit on every branch visitor who casually picks up a product brochure containing an application form.
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#1616273 - 10/17/11 01:42 PM
Re: Incomplete Online Application
Richard Insley
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100 Club
Joined: Nov 2004
Posts: 237
USA
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What if the online application is for a mortgage loan, and after obtaining the applicant's authorization but before they submit the application, you pull credit to provide an accurate rate/fees quote, and/or to determine if they are eligible for an onine approval, and/or to prepopulate their liabilities?
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#1616279 - 10/17/11 01:46 PM
Re: Incomplete Online Application
Amos
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Joined: Jul 2001
Posts: 83,227
Galveston, TX
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I think that you are in dangerous territory when pulling credit prior to the submit button being pressed. What is your permissiable purpose? I know the system that you are using and I have warned clients that this is going to eventually be an issue.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1616494 - 10/17/11 06:32 PM
Re: Incomplete Online Application
rlcarey
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Sounds like what you want is a prequal. You should consider setting that up instead of trying to make the rules fit your program, if I understand you correctly.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#1616541 - 10/17/11 07:37 PM
Re: Incomplete Online Application
rlcarey
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Joined: Nov 2004
Posts: 237
USA
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I think that you are in dangerous territory when pulling credit prior to the submit button being pressed. What is your permissiable purpose? I know the system that you are using and I have warned clients that this is going to eventually be an issue. We were advised by legal counsel that we had a permissible purpose because the consumer initiated the loan application.
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#1616590 - 10/17/11 08:53 PM
Re: Incomplete Online Application
Amos
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Joined: Jul 2001
Posts: 83,227
Galveston, TX
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How did they initiate an application or a request for financing without hitting the submit button? I would equate someone starting a mortgage loan application on the internet without hitting the submit button to the FTC staff opinion on permissible purposes for car dealers:
The 1998 staff opinion letter concluded that this language meant that this section applies only to situations where the consumer clearly understands that he or she is initiating the purchase of a vehicle. The dealer would thus have a permissible purpose to obtain a credit report on a consumer who offers to pay for an automobile with a personal check or asks about credit options to finance a specific purchase. However, this section would not allow the salesperson to obtain a report on “window shoppers” for bargaining purposes, deciding whether to spend time with consumers, or to respond to general questions about available products or financing, because there is no “transaction … initiated by the consumer” in those scenarios. For the same reason, a consumer’s request to “test drive” a vehicle, where he or she has not demonstrated an intent to initiate the purchase or lease of a vehicle, does not give rise to a permissible purpose under this section.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1617186 - 10/18/11 08:42 PM
Re: Incomplete Online Application
rlcarey
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Without a Submit, how do you even have any data? And are there "required fields" to complete in order to Submit?
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#1617242 - 10/18/11 09:30 PM
Re: Incomplete Online Application
Andy_Z
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100 Club
Joined: Nov 2004
Posts: 237
USA
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This is all handled within the software. The software pulls the credit report after the applicant has provided some application information (including name and SSN) and has authorized us to pull credit. There are additional pages on the web site that the applicant needs to complete before they can submit their application. And yes, they must complete all required fields before they can submit the application.
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#1617319 - 10/19/11 12:21 PM
Re: Incomplete Online Application
Amos
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Joined: Aug 2002
Posts: 3,094
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Amos, is it correct that the software pulls cr to determine whether the product selected by the applicant can be done online vs needing further review by a loan officer and that the credit rept is used to populate the debts on the application? Some online vendors run info thru DU to see if the application/upfront disclosures can be done online. (all this would be done after the submit button I assume - thus no cr decision is made prior to hitting submit)
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#1617338 - 10/19/11 01:10 PM
Re: Incomplete Online Application
ahou
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Joined: Nov 2004
Posts: 237
USA
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Yes, you can use the credit report to determine whether or not to send the application to DU or LP for an online approval. You can also determine by product whether to send to DU or LP. And yes, you have the option to use the credit report to prepopulate liabilities on the online application.
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#1618285 - 10/20/11 06:26 PM
Re: Incomplete Online Application
Princess Romeo
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Posts: 10,179
Toano, VA
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code it on your LAR as "Incomplete Application" Do you really think the types of situations you mentioned above rise to the level of an "application"? Section 203.2(b)(1) states that- In general. Application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested.If the customer has not clicked the "Submit" button, how can electronic doodling constitute a "request."
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#1618337 - 10/20/11 07:32 PM
Re: Incomplete Online Application
Richard Insley
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Power Poster
Joined: Jun 2001
Posts: 8,272
Where the heart is
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code it on your LAR as "Incomplete Application" Do you really think the types of situations you mentioned above rise to the level of an "application"? Section 203.2(b)(1) states that- In general. Application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested.If the customer has not clicked the "Submit" button, how can electronic doodling constitute a "request." It depends on what the automated system is doing. If it pulls a credit report and then it gets sent to DU to generate an initial decision, or even if the decision is made not to submit to DU because of what's on the credit report, it's hard to argue that the institution does not have an application. If on the other hand the system simply records the initial "doodle" but does nothing with it, then the entry can be coded as a non-submission and nothing further needs to be done. The problem is that these on-line mortgage system vendors are setting these up with an eye on automation and the ability to maximize opportunities, and the compliance side gets a bit of short shrift - well...... with the exception of the 50 bazillion disclosure pieces these things generate.
Last edited by Princess Romeo; 10/20/11 07:36 PM.
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#1618395 - 10/20/11 09:11 PM
Re: Incomplete Online Application
Princess Romeo
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100 Club
Joined: Nov 2004
Posts: 237
USA
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code it on your LAR as "Incomplete Application" Do you really think the types of situations you mentioned above rise to the level of an "application"? Section 203.2(b)(1) states that- In general. Application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested.If the customer has not clicked the "Submit" button, how can electronic doodling constitute a "request." It depends on what the automated system is doing. If it pulls a credit report and then it gets sent to DU to generate an initial decision, or even if the decision is made not to submit to DU because of what's on the credit report, it's hard to argue that the institution does not have an application. If on the other hand the system simply records the initial "doodle" but does nothing with it, then the entry can be coded as a non-submission and nothing further needs to be done. The problem is that these on-line mortgage system vendors are setting these up with an eye on automation and the ability to maximize opportunities, and the compliance side gets a bit of short shrift - well...... with the exception of the 50 bazillion disclosure pieces these things generate. Our online system does not send to LP or DU unless the applicant has clicked the "submit application" button and indicated their intent to proceed with the application.
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#1618409 - 10/20/11 09:35 PM
Re: Incomplete Online Application
Princess Romeo
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10K Club
Joined: Oct 2000
Posts: 10,179
Toano, VA
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I'm thinking that LAR entries for Bugs Bunny and Elmer Fudd with SSNs of 999-99-9999 and 888-88-8888 are going to be a waste of everyone's time. If, however, the online forms are smart and contain error traps to force valid responses, they will collect valid information which the back end system can use to make a preliminary decision. Just because valid information has been entered, that doesn't mean it's MY information until I click a Submit button certifying the accuracy and completeness of my data and requesting a credit decision.
I hope anyone who uses such sophisticated software provides a full explanation up front so applicants know that CB info will be pulled and a preliminary credit decision rendered before the application is completed and submitted. Also, there's an opportunity for prescreening and steering--which could expose the lender to charges of discrimination. Smart forms coupled with back end logic can manipulate the sequence of questions, change the way they're asked, increase or decrease the number of items requested, and otherwise stack or unstack the deck based on who knows what!
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...gone fishing.
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#1618411 - 10/20/11 09:38 PM
Re: Incomplete Online Application
Amos
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Joined: Oct 2000
Posts: 10,179
Toano, VA
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Our online system does not send to LP or DU unless the applicant has clicked the "submit application" button That's good. You've created a bright line (the "Submit" button) dividing casual doodling from applying.
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...gone fishing.
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#1618544 - 10/21/11 02:08 PM
Re: Incomplete Online Application
Amos
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100 Club
Joined: Nov 2004
Posts: 237
USA
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I think that you are in dangerous territory when pulling credit prior to the submit button being pressed. What is your permissiable purpose? I know the system that you are using and I have warned clients that this is going to eventually be an issue. We were advised by legal counsel that we had a permissible purpose because the consumer initiated the loan application. Also, we do obtain written consent from the applicants to pull their credit report, which gives us a permissible purpose under section 604(a)(2).
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#1618563 - 10/21/11 02:41 PM
Re: Incomplete Online Application
Amos
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Joined: Oct 2000
Posts: 27,748
On the Net
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Written consent isn't required. The app, or oral request is your permissible purpose. Being written you have an audit trail and that is good.
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#1618576 - 10/21/11 02:56 PM
Re: Incomplete Online Application
Andy_Z
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100 Club
Joined: Nov 2004
Posts: 237
USA
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Written consent isn't required. The app, or oral request is your permissible purpose. Being written you have an audit trail and that is good. My post about obtaining written consent was in response to rlcarey's post above where were we discussing the situation where a consumer started an application online, we pulled credit to present an accurate rate/fee quote and the consumer never hit the "submit application" button. Unless I am misunderstanding his post, rlcarey was saying I did't have a permissible purpose to pull credit because the consumer hadn't submitted the application. I was trying to justify that I did have a permissible purpose because I obtained the consumer's written authorization.
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