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#1966765 - 10/03/14 12:38 AM PICTURES OF DRIVER'S LICENSES IN LOAN FILES
Complianceking Offline
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Joined: Dec 2005
Posts: 437
West Coast
As a result of a QC review, It was noted that many of the loan files have pictures of Drivers Licenses in them. While arguably most of these are HMDA reportable loans and we have the Government Monitoring Information anyway, there has been prior guidance that suggests not including pictures of driver’s licenses in non-HMDA reportable files due to the possibility of examiners viewing this as collection of prohibited information. Is there any additional clarification on the subject matter that anyone wishes to share? I was under the impression that the driver's licenses were being provided to comply with CIP Section 326 of the USA Patriot Act. That being said, in order to avoid as a potential violation, I've heard that if a loan file does indeed contain a pictured copy of a driver's license, the it's best to remove the license from the loan file and maintain them in a totally separate file.
Last edited by Complianceking; 10/03/14 12:52 AM.
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Lending Compliance
#1966766 - 10/03/14 01:51 AM Re: PICTURES OF DRIVER'S LICENSES IN LOAN FILES Complianceking
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
This topic has been discussed for years and years. From a 2010 FDIC teleseminar on fair lending:

https://www.fdic.gov/news/conferences/fl/2010-11-16-qa.html


"10. I am an independent compliance consultant that works with various banks helping them with Fair Lending reviews and risk assessments. Do you see any problem with me using information from borrowers’ drivers licenses that are stored in the bank’s Customer Information System to obtain demographic information for fair lending analysis such as age, sex, and possibly race? As you know, the government monitoring information is only available for HMDA-covered loans. If I am trying to conduct fair lending analyses on other types of loans, such as consumer loans or vehicle-secured loans, there isn’t much to go on other than making assumptions about race via surnames and gender via first names. If I could use information from the drivers license that is imaged and in the bank’s system, I could get demographic information without having to make assumptions.

Do you see any problem with doing that? I am independent from the bank and this is done after the loan decision has been made (these are existing loans). To go one step further, would this be OK for a bank’s compliance officer to do too, if that person is independent from the lending function and it’s done after the loan decision has been made?

Regulation B does not prohibit the practice of photo copying or digitally storing photo identification, but it does prohibit the collection of certain demographic information. Given that photo identification usually contains this prohibited information, it is a best practice not to retain a copy of the photo identification. However, if a bank chooses to retain a copy of photo identification, it is best if it is segregated from loan files. Furthermore, the photo identification should only be requested to comply with the USA Patriot Act and not be used as part of the underwriting process.

Keeping the above in mind, photo identification that is available in a customer information system could be used to obtain demographic information to assist in a fair lending analysis. As stated in the question, it would be a more accurate way to conduct the analysis than making assumptions based on factors such as surnames."
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1966885 - 10/03/14 03:39 PM Re: PICTURES OF DRIVER'S LICENSES IN LOAN FILES Complianceking
Complianceking Offline
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Joined: Dec 2005
Posts: 437
West Coast
You're spot-on in your response. Thanks!

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