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#2094438 - 08/21/16 05:38 PM Is it necessary
nbk2yj2 Offline
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We are a New York Bank and I have heard the bank is using a 1003 for their Home Equity Loan Application? Is this necessary or can a consumer loan application be used like for a Home Equity Line of Credit? The 1003 seems really only conducive to purchase money or refinance of 1st mortgage (non home equity) based on the information being requested.

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#2094441 - 08/22/16 06:23 AM Re: Is it necessary nbk2yj2
David Dickinson Offline
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David Dickinson
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Central City, NE
You can use any for of application you want, but the 1003 is designed for home loans. Be careful that you don't collect GMI on a non-applicable loan, however. I wouldn't think you'd want to use the FNMA 1003 with Home equity loans as they aren't typically subject to HMDA (unless for Home Improvement purposes) and they aren't subject to Reg B's requirement to collect GMI. Therefore, you might be over-collecting GMI.

If you were to use the 1003, you could delete the GMI section.
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#2094444 - 08/22/16 12:01 PM Re: Is it necessary nbk2yj2
Rocky P Offline
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Florida
Bank was criticized (FDIC) for having the GMI boxes on consumer non-HMDA applications, even though the section was "X'ed" out. Said it would confuse the customer and could inadvertently cause erroneous data collection. Usually the amount of information for a purchase is substantially more than needed for other loans. The LO would be wasting their time collecting all the additional data.
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#2095044 - 08/24/16 06:36 PM Re: Is it necessary David Dickinson
nbk2yj2 Offline
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We are also not a HMDA reportable bank.

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#2095046 - 08/24/16 06:40 PM Re: Is it necessary Rocky P
nbk2yj2 Offline
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This was my thought, i.e. declaratory statements that call for answers are on the 1003 that are not on our consumer application. Is there a regulatory requirement to obtain these answers? Most of the answers would be found on the credit report anyway, questions about bankruptcy, delinquency...

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#2095446 - 08/26/16 01:34 PM Re: Is it necessary nbk2yj2
Rocky P Offline
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Posts: 7,650
Florida
There is just too much information on the 1003 that is unnecessary for most consumer lending. Why fill out 5 long pages when most banks cover it in 2 short ones?

Re the "declaratory statements" they are used on the 1003 that the customer is affirming that none of the information is incorrect (think prosecution/legal for intentionally trying to defraud the bank). Finding out a bankruptcy in a credit bureau is not defrauding the bank unlesess the customer certified there were none.
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