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#177437 - 04/06/04 09:04 PM Reg. B - joint intent - Regulator opinions
GreatBlue Offline
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GreatBlue
Joined: Feb 2003
Posts: 2,362
Colorado
Various posters have talked to regulators about this rule. Below is a summary of the responses. Obviously there is no consensus. So, how are we supposed to figure out what to do? AARRGH!!

Date Posted: 4/6/04
Poster: Andy Z
Thread: Reg B Rules on Joint Applications - Clarification
Agency Quoted: FDIC Chicago (teleconference)
Name:
Date of opinion: 4/6/04
Opinion given:
Quote:

It was clearly stated in response to my question that one spouse does not automatically have the power of attorney to affirm that another spouse (or other person) has the right to make that joint credit affirmation. Each person has to do this on their own. This differs from what I had heard, but is similar to what some others have been told.

It was also stated that they will want a written affirmation. This conflicts with what we have heard from other sources.



Bottom line: Cannot rely on statement of one applicant for the other applicant's intent


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Date Posted: 4/1/04
Poster: KrisH
Thread:reg B- joint credit -for the last time please
Agency Quoted: FDIC
Name: "local examiner"
Date of opinion: 4/1/04
Opinion given:
Quote:

The final outcome is that due to the introductory language on the top of the application, signing it would not prove intent as there are several reasons why an applicant is required to complete the application none of which clearly prove intent on their face. Here are some suggestions you can share:

8) Evidence of Joint Application.

New language has been added to section 202.7(d)(1) to emphasize that the submission of a joint financial statement or other evidence of jointly held assets may not be deemed by a creditor as an application for joint credit. (See page 13150.)

The official staff commentary has been revised to clarify that the creditor must document, at the time of application, the intention of the applicants to apply for joint credit. The comment provides guidance on the development of such documentation. The first four Model Application Forms in Appendix B to the regulation have been revised in accordance with this guidance.

Additional Clarifications:

* Uniform Residential Loan Application (Freddie Mac/Fannie Mae) - The current Uniform Residential Loan Application does not contain the language required to show the applicants intent to apply for joint credit; therefore, a separate request must be made with the application and documented. For example; the bank may preprint the question on page 4 of the application and require the prospective applicants to initial it, or may include an attachment with the application that requests such information. Either way, a signature on the application itself does not prove intent for purposes of this section.

* Telephone Applications - An institution must ask the prospective applicant of their intention to file jointly while on the phone, document it at the time the application is received, and subsequently have the applicant sign or initial the section of the application that acknowledges their desire to apply jointly.

* To have further evidence of an applicant's intention, an institution may wish to - although it is not required by the regulation - record the phone conversation (if your institution chooses to implement this policy, please do so in accordance with applicable state law for recording phone conversations).

* Electronic Applications - Bank must set up their system to require prospective applicants to answer affirmatively that it is their intention to apply for joint credit prior to being able to proceed with the submission of their application.

Hope this at least answers your question of what we will be looking for.



Bottom line: Signing an application form is not sufficient to prove intent.


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Date Posted: 4/1/04
Poster: DogLover
Thread: reg B- joint credit -for the last time please
Agency Quoted: OCC
Name: EIC
Date of opinion:
Opinion given:
Quote:

I am receiving information from our regulator (OCC) that when taking applications by phone that the lender must talk to each applicant to confirm that they are applying jointly. As there is not a requirement that the intent be in writing from the customer, their intent to apply jointly should be documented in the file.



Bottom line: Phone applications must determine intent by talking to each applicant.


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Date Posted: 3/30/04
Poster: Bear Collector
Thread:reg B- joint credit -for the last time please
Agency Quoted: FRB
Name:
Date of opinion:
Opinion given:
Quote:

We asked the Fed this question and they responded that we can rely on the response of the person we are speaking to, either on the phone or in person. It is not necessary to speak to both parties.




Bottom line: Phone applications can rely on one applicant to speak for the other's intent


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Date Posted: 3/30/04
Poster: David Dickinson
Thread: intent to be joint applicant
Agency Quoted: FRB (via ABA)
Name: Jane Gell (via Nessa Feddis)
Date of opinion: 3/29/04
Opinion given:
Quote:

I spoke to Jane Gell who agrees with us and does not believe there is any ambiguity. There is no requirement for a written application for joint accounts: banks can rely on procedures that show they obtained an application from both spouses. However, to protect the banks from Reg B claims, there has to be some sort of indication that both spouses have applied, not just signed the contract. This could be determined in a variety of ways, including a written application, but oral permission is acceptable if there are established procedures in place.

In some cases, a written application may be the only way, e.g., if a card marketer solicits a person, asks them if the applicant wants the spouse on the account, relies on the applicant's response only, the bank could be vulnerable if it turns out if the spouse did not want to be liable on the account. Could get tricky, for example, if the couple were about to separate.




Bottom line: Vague "some indication that both spouses have applied"
"Written application is one way to do this."


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Date Posted: 3/29/04
Poster: Terry
Thread: intent to be joint applicant
Agency Quoted: FRB
Name: Minh-Duc Le
Date of opinion: 3/26/04
Opinion given:
Quote:

She stated that the requirement was meant to be flexible and that it only requires a bank to have a way to clearly document who actually applied for credit. She said that we don't need a separately signed section on the application, or elsewhere, stating intent for joint/individual credit if the bank has a way to clearly document who actually applied for credit. She stopped short of saying that signatures at the bottom of a regular application would meet this requirement when the language with the signatures doesn't explicitly state that the signing party is actually applying for credit.

Similarly, I asked about acceptable practices to document intent for phone applications. In particular I asked if the lender can ask the question verbally and document the answer on the application or elsewhere in the file. She reiterated that the requiement is flexible and that each bank needs to develop procedures based on their own comfort level that they can show that they met the requirement. She added that a signature from the applicants would be best, but that other options would be acceptable. I'm also unsure about whether a signature from one of the joint applicants is sufficient, or if we need all joint applicants to document their own intent. I would have thought that we need something from each joint applicant, but based on her answers to my questions, I wonder if it may be adequate to get a statement from one covering all joint applicants.

I also asked about how to document intent for people who are going to personally guarantee a business-purpose loan in situations were all guarantors don't meet face to face with the lender during the application phase. She said she'd need to look into it and get back with me.




Bottom line: No separately signed intent statement is required.


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Date Posted: 3/25/04
Poster: David Dickinson
Thread: intent to be joint applicant
Agency Quoted: FRB
Name: Jane Gell (?)
Date of opinion: 3/24/04
Opinion given:
Quote:

Here's a summary of our conversation.

1. We do need evidence 100% of the time where there are joint applicants.

2. If all applicants sign an application, you have your evidence. Most likely the application states "application for credit", "Borrower/Co-borrower", etc. so this is evidence that they want to apply - even if the attestation above their signatures doesn't say "I wish to apply". The Evidence at the top of the model forms is not necessary - this was just a way to demonstrate the Evidence.

3. Evidence does not have to be signed by the applicants. For instance, if you have a phone application, the loan officer can simply put a note in the file stating that he/she took a joint application on this date for this much.

It was stressed that all the loan officer needs to do is show intent. The loan officer has great latitude in how to do that.

F/U: She said if you have a signed application, you have evidence that they wanted to apply.




Bottom line: Signed application is adequate proof of intent. A notation in the file for phone applications is acceptable.


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Date Posted: 3/22/04
Poster: Jack/Pegasus
Thread: intent to be joint applicant
Agency Quoted: FRB
Name: Staff attorney
Date of opinion: 3/18/04
Opinion given:
Quote:

I discusssed this matter with a fed staff attorney on Thursday March 18th. There are no plans to issue Offical Staff Commentary on this matter in the near future. The indication was that something other than the signature on the application affirming the accuracy of the data is needed. Some other effort is necessary to indicate the evidence of intent to be a joint applicant.




Bottom line: Something other than the signature on the application affirming information is needed.


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Date Posted: 2/2/04
Poster: Anonymous
Thread: Reg B & joint credit
Agency Quoted: FRB
Name: Sr. Attorney & Regional Fair Lending Specialist
Date of opinion:
Opinion given:
Quote:

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.




Bottom line: Signature on application is inadequate must have some other signature or initial.


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Date Posted: 1/28/04
Poster: cvc
Thread: Reg B & joint credit
Agency Quoted: FRB & FDIC
Name:
Date of opinion:
Opinion given:
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.




Bottom line: Signature on application is inadequate must have some other signature or initial.
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#177438 - 04/06/04 09:06 PM Re: Reg. B - joint intent - Regulator opinions
P*Q Offline

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P*Q
Joined: May 2001
Posts: 8,458
Somewhere
Right on Great Blue, and to add to the pot, I just added another e-mail I received from the FDIC. UGH, it's so frusturating!

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#177439 - 04/06/04 09:08 PM Re: Reg. B - joint intent - Regulator opinions
Dan Persfull Offline
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Joined: Aug 2002
Posts: 46,765
Bloomington, IN
Jill, did you get bored?

Thanks.
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#177440 - 04/06/04 09:12 PM Re: Reg. B - joint intent - Regulator opinions
GreatBlue Offline
Diamond Poster
GreatBlue
Joined: Feb 2003
Posts: 2,362
Colorado
Quote:

Jill, did you get bored?





LOL! Nope, just frustrated beyond all reason!
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#177441 - 04/06/04 09:15 PM Re: Reg. B - joint intent - Regulator opinions
Terry Offline
Gold Star
Terry
Joined: Sep 2001
Posts: 314
Midwest
Thanks Great Blue, I was about to go through the threads and do this for myself, so I'm really glad you did it for us.

We're a mult-bank holding company. We have banks regulated by all four of the federal agencies - so my head is just spinning. I had hoped to come to some final conclusions on this stuff today and issue some follow up guidance internally, but I think I'll just go home and try again tomorrow.
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#177442 - 04/06/04 09:23 PM Re: Reg. B - joint intent - Regulator opinions
Beagles22 Offline
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Joined: Jan 2004
Posts: 3,626
State of confusion
I was in the Chicago phone seminar and left more confused than I started!!! I can't believe that so many opinions can come from different people at the same agencies!! AAAAAAAHHHHHHHH!!!!!!
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#177443 - 04/06/04 09:31 PM Re: Reg. B - joint intent - Regulator opinions
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,485
On the Net
For those of you who remember Welcome Back Kotter, here is the disclosure needed to comply.

"I want to apply jointly,

Signed

Epstein's mother"
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#177444 - 04/06/04 10:00 PM Re: Reg. B - joint intent - Regulator opinions
Anonymous
Unregistered

This is ridiculous to come out with a revised rule when the powers that be cannot even agree!

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