We will soon have applications for all products on our website that can be submitted electronically. We will have a zip code filter in place so that we accept only applications in our trade areas. The customer will still be required to come in the bank to complete the account opening and/or loan closing. We are basically viewing this as a way to have everything ready for the customer when they come in to sign. What disclosures are required since we are not truly approving or declining loans or accounts on the web? Do we still have to post our loan and deposit rates? Since we operate in different markets, different branches have different rates depending on the competition in that area, therefore a rate sheet for the main bank may be different from the rate sheet at a branch 60 miles away. How are other banks handling this?

Thanks for your help!

You may not be "truly approving or declining loans or accounts on the web" but you are receiving applications. Some disclosures are triggered at application (HELOC booklet and program disclosure, ARM program disclosure and booklet), some within 3 days of application (RESPA's servicing disclosure, GFE, Special Info booklet), etc. So you must have some means to prepare and provide these disclosures when someone applies for applicable loans over your website.

You do not have to provide your loan and deposit rates.

Change the media and think of what is required if it was faxed to you. That receipt can trigger loan ("Z" and RESPA) disclosures and if it is a deposit, TISA.

You may opt to make some E-Sign/UETA disclosures and get to the point of making some disclosures online, or you may opt to omit some things, such as a property address in RE loans, and keep this in the pre-qual category.

If you want to make the rate disclosures, first they have to be correct. That is a common violation. But your Webmaster should be able to display the correct disclosures based on the applicable locations rates based on ZIP. The problem you may have there is if they search your site some other way and see better rates at another branch they can get to. Whay accept this if I can get "this+1%? For this reason, we have one set of rates for the state.

Thanks for your help! Our sr. mgmt. doesn't want to have to post our rate sheets on line for either type of products, so ya'll are saying that it is not mandatory. I thought that it was required, but here is my point: Who is going to apply for a product when they don't know the rate they are going to be getting? Would it be possible to have an "On-line" rate sheet for products applied for over the internet only?

Thanks again!

I think you have the cart before the horse. I apply, you tell me what rate you can give me, I accept or withdraw. How can a loan officer quote a rate before an application is received an analyzed? Besides, loan rate sheets are generally a guide line. I can lower or raise the rate (from the rate sheet) depending on the specific risks associated with the applicant. All of that decision making comes after the application is submitted.

Picking up on David's posting -- Even if all you are doing is providing an application that must be printed, completed, and mailed or delivered in person, you may have some disclosure challenges. For example, the HELOC and ARM disclosures mentioned in David's offering will have to be there if you have an application that can be used even in paper form.

I disagree with Dave's position about the sequence of events. Consumers don't buy ANYTHING until they know the price. Whenever I see a promotion with a "click, call, mail, etc. to purchase" response device, but no price is mentioned; I automatically assume the price is outrageous and trash the promo. If you want online consumers to give your e-aps a second look, you'll need a rate board page. As in the real world, you will probably need a disclosure that applicants must meet certain requirements to obtain the advertised rates.

So how do you handle a customer that has marginal credit? You decide you will make them a loan at 11% but your rate board says loans of this type are 8%. Now what do you tell the cusomer? And can they claim bait and switch deceptive practices? Must be different in your part of the country. What I described is how things are done around here.

David - I understand that reasoning from a loan application, but when applying for a deposit product, I can't see why anyone would apply when they don't know what rate they would be getting.

I have not addressed deposit accounts in this string. I have spoken only about loan rates. I agree and that is why you often see deposit rates advertised on web pages. Besides, rarely are they negotiated. Additionally, it is much easier to advertise APY (& all of the triggered disclosures) than it is APR (& have to give a repayment example for each).

I agree there's a reluctance to post loan rates--probably because of the requirement for a representative repayment amount and the APR, as David mentions, but also because banks are more interested in trying to lure core deposits. Lots of banks (a few in Nebraska follow) and almost all mortgage lenders are posting loan rate boards, however.

http://www.firstnational.com/fnb/
http://www.tieronebank.com/loans/mortgage_loans.html
http://www.abtbank.com/loanrates.html

Recognizing that customers must meet age, location, creditworthiness, and possibly relationship requirements, many banks include notices about the requirements.

So John, are you saying that since the application is on line, that is considered to be the time the customer is given the application. Duh! Kinda seems to be obvious that that is when they are given the application. I guess I always understood the reg. to say at the time of application.
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"Even if all you are doing is providing an application that must be printed, completed, and mailed or delivered in person, you may have some disclosure challenges. For example, the HELOC and ARM disclosures mentioned in David's offering will have to be there if you have an application that can be used even in paper form."
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How do you do this? By a link? Or a pop up window?
Thanks

Yes, you will need some type of pop up and a "I have read and agree" link to return. They should also be able to print and retain the disclosure. Al Miller has discussed this before. I know that his bank's web site has this type of application & disclosure combo. You should do a search on BOL for "web (or internet) applications" as this has been discussed here many times. Also, here is a link to Fremont (Al's) bank's website:
http://www.fremontbank.com/

How do you interprete Reg Z 226.19(b)(45b) where it says: Disclosures may be delivered or placed in the mail not later than three business days following receipt of a consumer's application when the application reaches the creditor by telephone, or through an intermediary agent or broker?
And also Reg Z 226.5b(b)(10a) where it says:
The disclosures and the brochure may be delivered or placed in the mail not later than three business days following receipt of a consumer's application in the case of applications contained in magazines or other publications, or when the application is received by telephone or through an intermediary agent or broker?
Since it does not refer to by internet does that exclude that medium from this section? In other words, we need to provide the disclosures at the time the consumer receives the application. Just want to make sure. Thanks

The Fed addresses these issues (and the one in Section 226.5a) in the "e-Regs" (2001 updates to the Commentary.) The bottom line is that e-apps must be accompanied by the disclosures in all cases.

Aw Shucks!! Thought I might have found a way around it. Thanks Richard (I guess)

Don't forget that there are other disclosures like the insurance disclosures that must be given at the time of loan applications (and acknowledged!).

You were in good company, Peg E. Lots of banks had "borrowed" this rule for web-apps until the Fed created this special interpretation just for the Internet.

So, technically, since the electronic disclosure regs are "on hold," we can have an on-line application with no disclosures and treat it as a mail-in application, right? (I am not saying I agree with this approach, just that we would not be in violation of any regs. if we had an online mortgage app. without any disclosures).

I wouldn't recommend that approach. One day without warning (like the last time) the Fed may drop another final rule on us and you will be out of compliance.

Where can I find the requirement for a representative payment amount and APR in the regs? I am conducting a review of our bank's web site. We have a range of rates posted for various loan types but no APR or representative payment amount. I need to be able to reference the specific regulation which requires this.

Any assistance in this area would be appreciated.

§226.24(c) and footnote 49. It applies to Web ads for closed-end credit just as it applies to printed ads.

Thanks for your help. I can always count on BOL when I need answers.