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#1721473 - 07/19/12 02:01 PM Reg B/ GMI on app issue
Trees Offline
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Joined: Apr 2005
Posts: 4,013
Online app customers complete applications and often incoude the GMI even though the loans may not need to be reported. Reg B commentary 1002.13(b)(6)appears to accept this potential issue and therefore we feel it is OK to leave the apps alone. Apps are coded that they were online versus face to face apps, where we would be expected to guide the customer accordingly.

In the past we would wite-out the GMI for loans that are not reportable, as a secondary precaution. never been an issue with examiners and wasn't last time.

I want to discontinue the wite out process and leverage off the commentary and out app coding to support us during an examination.

However,I would like to know how you are handling similar instances where a customer provided the GMI, online, but didn't need to.

Thanks.

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#1721485 - 07/19/12 02:21 PM Re: Reg B/ GMI on app issue Trees
Dan Persfull Offline
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Dan Persfull
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Posts: 46,961
Bloomington, IN
I want to discontinue the wite out process and leverage off the commentary and out app coding to support us during an examination

If you are not addressing the information being collected in error then how do you intend to rely on the "inadvertent collection" exemption?

Also, if you are continuing providing the applicant an application form that asks for the information when it is not required then are you truly inadvertently collecting the information?
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#1721487 - 07/19/12 02:24 PM Re: Reg B/ GMI on app issue Trees
#Just Jay Offline
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#Just Jay
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Cheeseheadland
IMO, if your online application is a static multi-purpose application, and cannot modify itself based on the type of loan, or purpose of loan being applied for, the bank is opening itself up for significant compliance risks and penalties at some point.

I certainly would not want to tell the story to my examiner, "Well you see, the customer just didn't know better to leave it blank...". Inadverant should be far and few between... you state: "...applications and often incoude the GMI...", which tells me that the good ship inadverant has already set sail.

eek
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#1721497 - 07/19/12 02:47 PM Re: Reg B/ GMI on app issue Trees
KPOC Offline
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KPOC
Joined: Jul 2012
Posts: 460
Greater Boston Area
We actually just had this issue with our home improvement loans (not RE secured). We use our personal loan application for general unsecured personal loans, auto loans, and unsecured home improvement loans (we are a HMDA reporter). Since we used the same application, applicants were completing the GMI section for personal and auto loans. Even though we had a bolded notice telling the applicant to only complete the GMI for HI loans, and had the GMI in a box segregated from the rest of the application, applicants still completed it. Furthermore, when it was inproperly filled out, our branch staff put a big "X" through it to evidence that it should not have been completed. Guess what, examiners didn't care. We were written up with a significant violation for inappropriately collecting GMI. Needless to say, we now have separate applications.

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#1721502 - 07/19/12 02:55 PM Re: Reg B/ GMI on app issue Trees
Happy Birthday Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,281
I have to agree. This would be inappropriate collection of the information. It is very easy online to line to a correct application for a specific product.
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#1721507 - 07/19/12 02:59 PM Re: Reg B/ GMI on app issue Trees
Trees Offline
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Joined: Apr 2005
Posts: 4,013
Interesting. We have used the same Res. mortgage application for years - acceptable to the secondary market. We have always had no issues with examiners on this point and they certainly saw the wite outs, including during the most recent exam in 2011. However, they do appear to be writing up banks for all kinds of things these days.

We'll have to look at this one.

Thanks all.

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#1723024 - 07/25/12 01:21 PM Re: Reg B/ GMI on app issue Trees
Trees Offline
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Joined: Apr 2005
Posts: 4,013
Still thinking about this one. For those of you that said you are providing online apps tailored to the type of loan, I would like to know who the vendor is. We use Calyx and they've indicated only the 1003 is available through them.
Last edited by Trees; 07/25/12 01:22 PM.
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