I know that for the BSA record keeping requirements we need the name and address of the borrower, the amount of the credit, it’s nature/purpose, and date for any extension of credit in excess of $10,000 not secured by real property. But am getting push back from our lenders on how specific the purpose needs to be? For example is "personal expenses" for a Home Equity Line of Credit acceptable, or does it need to be more specific such as home improvements, paying off bills, etc.

Any assistance would be greatly appreciated.

I would be detailed - not generic for sure - just as when gathering account CDD information for a new deposit account. We have seen "Type of Business" and they state "Business" and the FSR puts that in the form. Generic tells you (or a regulator) nothing.

I am trying to find any specific guidance, but am not coming up with anything. Does anyone know if there is specific guidance in this area?

In general, the statement of purpose for fixed end credit should be adequate to allow any reviewer to "chase proceeds;" i.e. compare what the borrower actually did with the funds compared to what he said he was going to do. (It's a crime to lie to a federally insured financial institution if the truth might have affected the credit decision.)

"Personal" is not a statement of purpose. "Business" is not a statement of purpose. What are you going to do with the money? Some banks acknowledge it is an underwriting issue as well and incorporate it into their loan policy without regard to the size of the loan or the security offered.

Regardless, for an open line of credit, particularly to a consumer, there simply is not going to be a single statement of purpose. On my HELOC application I put "consumer purchases and short term credit needs."

I do not know of any specific guidance, but several years ago a bank was penalized because all of its commercial loans were for "operating capital." That's a legitimate purpose, but it's not a label that is appropriate for every loan.

Ken - Since HELOC's are secured by real property, they are exempt from this aren't they?

Yes, but the question was on the application. I was just saying how I answered it.

Thank You Ken