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#2103120 - 10/14/16 08:03 PM Indirect Loan Applications - Loan Purpose
Wildcat Rampage Offline
Member
Joined: Aug 2016
Posts: 91
Kentucky - Home of the 8 time ...
I'd like a little clarification on the greater than $10,000 loan purpose BSA rules.

The rule says that for extensions of credit not secured by real property that we must maintain a record of:
•Name of borrower.
•Address of borrower.
•Amount of credit extended.
•Nature or purpose of loan.
•Date of loan.

If I take that literally, that means that I only need a loan purpose for consummated loans. It also means that I only need the loan purpose to be somewhere in the loan file.

I ask this because, like most, I do this the easy way and request a loan purpose to be given on the application for credit.

My point is this, if I'm being literal, do I have a BSA violation if I don't have a loan purpose for a denied loan?

My next point is, if the lender summary explains the purpose of the transaction, would that be sufficient?

I'm going through this because we've found some indirect loan applications with no loan purpose on the loan application. It looks wrong, but we know the purpose of each one of these applications because with our indirect dealers there is only one purpose - to purchase a widget (or do we need to request the dealers to be more specific with indirect and list the model number, year, serial/VIN of each widget?). If we ask, they'll be annoyed and send the business to a bank that doesn't pay attention to the details (or has a higher risk appetite).

What are the parameters for indirect loan purpose?
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#2103122 - 10/14/16 08:20 PM Re: Indirect Loan Applications - Loan Purpose Wildcat Rampage
Beachbum, CRCM Offline
Gold Star
Joined: Dec 2006
Posts: 480
Knee Deep in Regs
" My point is this, if I'm being literal, do I have a BSA violation if I don't have a loan purpose for a denied loan?"

if the loan is denied you do not need to keep a record because credit was not extended.

our in-direct dealers rarely put purpose of loan on the application, but the application is self explanatory.
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#2103133 - 10/14/16 09:41 PM Re: Indirect Loan Applications - Loan Purpose Wildcat Rampage
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree with Beachbum. The point of this requirement is that lenders not fund drugs or other illegal activities. Don't say "Business" or "Consumer" as a purpose. It's typically not a problem because somewhere in the loan documents there should be a specific purpose. Lenders typically want to know where their money is going. Rarely I'll see this cited because they simply failed to document it.
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http://www.bankerscompliance.com

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