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#2152989 - 11/10/17 02:55 PM Subsequent collection of Demographic Information
niche girl Offline
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Like most folks, I am struggling with how to ensure my MLOs who receive an online or mail application where the customer leaves the demographic addendum blank remember to request the information if they happen to meet in person at a later date. I see lots of situations where they meet the customer in person outside the office away from their computer going to pick up documents or to get signatures even a month or more after they took the application. I know that they are highly unlikely to remember to bring a demographic information addendum with them or even remember who out of their large pipeline of loans didn't provide it at all. When our MLOs receive an online or mail application, they are required to contact the customer by phone as soon as possible to obtain any missing URLA information, and walk through the process and expectations. Although it isn't specifically addressed, would it be a violation if I instructed the MLO's to use that URLA completion phone call to request the missing DI just as they would any other missing URLA information and use the same script for asking for it they normally would on any application during the initial interview? That is the process that is follow for any other URLA information that is left "blank" so I don't see it would be a problem to request the DI that way either rather than rely on the MLO to remember if there happens to be an opportunity to meet the customer in person.
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#2153026 - 11/10/17 04:21 PM Re: Subsequent collection of Demographic Information niche girl
Adam Witmer Offline
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Originally Posted By niche girl
Although it isn't specifically addressed, would it be a violation if I instructed the MLO's to use that URLA completion phone call to request the missing DI just as they would any other missing URLA information and use the same script for asking for it they normally would on any application during the initial interview?


If they didn't state that they chose to not provide it, I can't see how it would be a violation to ask for required information.
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#2153166 - 11/11/17 02:47 AM Re: Subsequent collection of Demographic Information niche girl
Truffle Royale Offline

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Quote:
I am struggling with how to ensure my MLOs who receive an online or mail application where the customer leaves the demographic addendum blank remember to request the information if they happen to meet in person at a later date.
huh? Am I missing something? It was never a requirement to get the information left blank on a mail or online app and I don't see where that changes in 2018. You've always been allowed to collect it any time during the application phase, but never required to. I don't think bumping into the borrower in the grocery store parking lot would count as part of the application process. If you're going to require ALL MLOs to try to collect this information on internet or mail (and fax for that matter) apps, then you need to set realistic procedures for when and how to do so.

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#2153168 - 11/11/17 03:04 AM Re: Subsequent collection of Demographic Information niche girl
David Dickinson Offline
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You ARE required to collect Demographic Information IF the applicant left it blank in a non-person application and you meet with them in person during the application process (prior to closing). Here's the statute:

[i]If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex. If the applicant does not provide the requested information during the in-person meeting, you must collect the information on the basis of visual observation or surname.[/i[ [Appendix B to §1003 #12]
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#2153173 - 11/11/17 11:48 PM Re: Subsequent collection of Demographic Information niche girl
Truffle Royale Offline

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There's a difference between your statement, David, "...meet with the person during the application process" vs "(prior to closing)".
The citation you used states: " and the applicant meets in person with you to complete the application."
Meeting "to complete the application" would happen way before you got even close to closing.
The emphasis I'm getting from you is that we should continue to try to collect right up to closing.
I don't get that from the Reg.

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#2153178 - 11/13/17 03:20 AM Re: Subsequent collection of Demographic Information niche girl
niche girl Offline
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Thanks all. My concern is that the MLO will get an online app where the borrower skips the demographic info and then comes in to bring documents and the MLO will fail to note their information as required. I thought a way to avoid that issue would be to have the MLO use the initial courtesy call to the borrower to say, "Mr. Smith, I noticed that you did not complete the page of the online application where you are requested to provide your race, ethnicity or sex. Is that because you elected not to provide it or would you like to do so now?" If he says "no, I didn't want to provide it", mark all 3 as "do not wish to provide" and viola, no blanks on the LAR and no problem with finding out the customer came in to visit with the LO several times, but the LO didn't ask for or record the demographic info.
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#2153186 - 11/13/17 01:11 PM Re: Subsequent collection of Demographic Information Truffle Royale
Adam Witmer Offline
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Originally Posted By Truffle Royale
There's a difference between your statement, David, "...meet with the person during the application process" vs "(prior to closing)".
The citation you used states: " and the applicant meets in person with you to complete the application."
Meeting "to complete the application" would happen way before you got even close to closing.
The emphasis I'm getting from you is that we should continue to try to collect right up to closing.
I don't get that from the Reg.


Not David, but this is a very interesting point, Truffle. The full section of what David quoted does end with another statement that says "If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant's ethnicity, race, and sex."

To me, the problem is that the phrase "application process" is not clearly defined. This last sentence, however, could be understood to imply that meetings with an applicant prior to "closing or account opening" are considered to be during the "application process" because this is the only example they provide to explain when an application process is considered complete.

While this is debatable, it would appear appropriate to be in a camp that considers any meeting prior to closing to be part of the "application process." I have heard some bankers say they will be in this camp while other bankers have said the are going to defined the "application process" as meaning prior to the final approval. I'm sure there will be examiners in both camps, so defining what you consider to be during the "application process" will probably be prudent.

For reference, here is the full section that David quoted:
"12. If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex. If the applicant does not provide the requested information during the in-person meeting, you must collect the information on the basis of visual observation or surname. If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant’s ethnicity, race, and sex."
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#2153187 - 11/13/17 01:14 PM Re: Subsequent collection of Demographic Information niche girl
Adam Witmer Offline
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Originally Posted By niche girl
I thought a way to avoid that issue would be to have the MLO use the initial courtesy call to the borrower to say, "Mr. Smith, I noticed that you did not complete the page of the online application where you are requested to provide your race, ethnicity or sex. Is that because you elected not to provide it or would you like to do so now?" If he says "no, I didn't want to provide it", mark all 3 as "do not wish to provide" and viola, no blanks on the LAR and no problem with finding out the customer came in to visit with the LO several times, but the LO didn't ask for or record the demographic info.


I don't think there are any problems in doing this. I definitely cannot see how anyone would consider this a "violation" as you asked originally.
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#2153211 - 11/13/17 03:31 PM Re: Subsequent collection of Demographic Information Adam Witmer
Truffle Royale Offline

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Then why is there still a code 3 - information not provided by applicant in mail, internet or telephone application?

The citation reads
Quote:
"12. If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex. If the applicant does not provide the requested information during the in-person meeting, you must collect the information on the basis of visual observation or surname.


That seems pretty plain English to me. If the borrower starts but does not finish an application and comes in to finish it with the LO in the specifically mentioned in-person meeting, then (and imho ONLY then) is the LO obligated to complete the information.
The citation finishes stating the information doesn't have to be collected at a later day and uses as an example the closing or account opening. It doesn't say that you have to consider the entire period of processing a loan part of the application process. It doesn't say you have to call the borrower to make sure they don't want to provide it.

Absent anything to the contrary from the CFPB, it is my opinion that we do not have to chase the borrower down or keep after them to provide demographic information. The CFPB is borrower oriented. I should think they would know how offensive borrowers could find being badgered to tell a bank what their ethnicity/race/sex are.

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#2153217 - 11/13/17 03:57 PM Re: Subsequent collection of Demographic Information niche girl
Monster Offline
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FWIW - I've emailed HMDA Help with this question, since it will really change our process if David's opinion is correct. TR, you bring some great points that I hadn't picked up on prior.

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#2153234 - 11/13/17 04:45 PM Re: Subsequent collection of Demographic Information Truffle Royale
Adam Witmer Offline
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Originally Posted By Truffle Royale
Then why is there still a code 3 - information not provided by applicant in mail, internet or telephone application?

IMHO code 3 seems to be there for when an applicant affirmatively says they don't want to provide the DI:

11. If the applicant declines to answer these questions by checking the “I do not wish to provide this information” box on an application that is taken by mail or on the internet, or declines to provide this information by stating orally that he or she does not wish to provide this information on an application that is taken by telephone, you must report “information not provided by applicant in mail, internet, or telephone application.”

IMHO, the rule doesn't address situations where the applicant passively didn't provide it. In reading the sections previously quoted, it appears the CFPB wants us to make a due diligence effort to get an affirmative statement from the applicant if we see them in person during the "application process."

Originally Posted By Truffle Royale
It doesn't say that you have to consider the entire period of processing a loan part of the application process.

I agree that it doesn't clarify either way, thus I have seen two camps. As the only example of a later day is "closing or account opening," some have taken the side that it should be requested in meetings prior to closing.
Originally Posted By Truffle Royale
It doesn't say you have to call the borrower to make sure they don't want to provide it.

I agree completely. The OP asked if it would be a "violation" to do so. Though not required, I don't see how it could be a violation to call and ask for it.
Originally Posted By Truffle Royale
Absent anything to the contrary from the CFPB, it is my opinion that we do not have to chase the borrower down or keep after them to provide demographic information. The CFPB is borrower oriented. I should think they would know how offensive borrowers could find being badgered to tell a bank what their ethnicity/race/sex are.

I agree that we don't have to chase the borrower down to provide DI. I think the hang-up is strictly on if - and only if - we see the applicant in person before "closing or account opening" and they also originally left the DI blank (from a mail/electronic app where they did not specifically state they did not want to provide it). In that case, it appears that the rule could be requiring a visual observation of DI.
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#2153260 - 11/13/17 05:55 PM Re: Subsequent collection of Demographic Information Adam Witmer
Truffle Royale Offline

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I was with you up till the last sentence, Adam.
Quote:
If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant’s ethnicity, race, and sex."


Closing was an EXAMPLE not a hard stop used to define the 'application process.'
I see nothing in all you quoted that states that not checking the 'do not wish' box means you have to pursue the information.
Logically, the borrower is going to read the box and either answer or skip it.
The type of borrower who does not wish to provide is not going to weed through and check that box after each instance.

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#2153265 - 11/13/17 06:20 PM Re: Subsequent collection of Demographic Information Truffle Royale
Adam Witmer Offline
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I don't disagree with you, TR, and think we are pretty much in agreement. The only thing I'm wondering about at this point is this:

Originally Posted By Truffle Royale

I see nothing in all you quoted that states that not checking the 'do not wish' box means you have to pursue the information.

IMHO, I am thinking the following does require us to pursue DI information in a follow-up in person meeting, because of "not checking the 'do not wish' box":

"12. If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex. If the applicant does not provide the requested information during the in-person meeting, you must collect the information on the basis of visual observation or surname. If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant’s ethnicity, race, and sex."

Would you agree that it appears this section wants us to request the DI during and in person meeting (during the application process) if the applicant did not check or select the "I do not wish to provide this information" box on the application? Or, am I missing something?
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#2153285 - 11/13/17 06:47 PM Re: Subsequent collection of Demographic Information niche girl
David Dickinson Offline
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Quote:
There's a difference between your statement, David, "...meet with the person during the application process" vs "(prior to closing)".
The citation you used states: " and the applicant meets in person with you to complete the application."
Meeting "to complete the application" would happen way before you got even close to closing.
The emphasis I'm getting from you is that we should continue to try to collect right up to closing.
I don't get that from the Reg.

You're right. This is my consultation after studying the regulation and discussing it with the CFPB. Here's my conclusion:
You don't need to collect Demo Info at closing (and I don't believe you should).
You must collect it IF you meet with the application during the application process.
So when does the application process end? You could say "when we have a complete application" but when I discussed this with the CFPB, the attorney said this didn't mirror the definition of "complete application" in Reg B and Reg C doesn't address it either. I responded, "would it be safe to say you're still in the application process until you get to closing or possibly when you provide the closing disclosure (on applicable loans). He agree but didn't say you have to pick that.

If you want to choose a different interpretation of what "Meeting "to complete the application" means, that's fine. However, good luck with an examiner that shows you a file where you believe the application is complete but the applicant brought you a verification document that changed the loan officers decision.

Again, the term is not "completed application". It's application process. When is that completed?

As Adam pointed out, it's not clear what this term (application process) means. The point is a field examiner could argue with you if you didn't collect Demo Info yet still met with the applicant late in the process. IOW, if you try to say "we're not in the application process at this point", you might be wrong, but you might lose the argument. If you choose to apply a procedure as I suggest, you can never go wrong. I always try to look for the "path of least resistance" and provide clear guidance to clients. Thus, this is what I suggest.
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#2153286 - 11/13/17 06:52 PM Re: Subsequent collection of Demographic Information niche girl
David Dickinson Offline
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Truffle: You stated "Absent anything to the contrary from the CFPB, it is my opinion that we do not have to chase the borrower down or keep after them to provide demographic information. The CFPB is borrower oriented. I should think they would know how offensive borrowers could find being badgered to tell a bank what their ethnicity/race/sex are."
No one ever said this and Adam agreed that's not in the reg or what I stated.

You also said "I see nothing in all you quoted that states that not checking the 'do not wish' box means you have to pursue the information." You must have missed this:
If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex. If the applicant does not provide the requested information during the in-person meeting, you must collect the information on the basis of visual observation or surname. [Appendix B to §1003 #12]

If they leave the Demo Info section blank, you DO have to pursue the info IF you see them during the process. That's the whole point of this. It's a change from today's requirements.
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#2153386 - 11/14/17 01:37 AM Re: Subsequent collection of Demographic Information David Dickinson
Truffle Royale Offline

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Yes, David, I saw the whole citation each and every time it was quoted here and any number of times during trainings and readings before this thread.

Quote:
If they leave the Demo Info section blank, you DO have to pursue the info IF you see them during the process. That's the whole point of this.
You missed the operative word in that quotation, David, and that is APPLICATION process.

My contention is that the application process is not defined either.
As Adam shared above, the rest of the citation is:
Quote:
"If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant's ethnicity, race, and sex."

Going back to Reg C which, after all is the foundation for this entire discussion we find:
Quote:
Under HMDA (§1003.2(1)) Application is defined as:
“In general. Application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested.”


If an applicant walks in with a partially completed application and the Lender sits down and helps complete it, of course (s)he should follow the citation you all have used here.
In my reading, that's the only time I'm going to tell the LO to mark and/or do visual.
If the mail/fax/internet application is complete other than checking the 'I do not wish to complete' boxes, it stops right there.

To all readers, this is my understanding and opinion of the Reg. Other than my boss, no one pays me to read and interpret so take it for it's worth.

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#2153399 - 11/14/17 01:27 PM Re: Subsequent collection of Demographic Information niche girl
RR Joker Offline
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I think the whole argument is pointless. There is zero way to monitor or prove whether or not an applicant ever graced the premises other than to get their money...bet a dime to a donut most of ours don't [those that don't come in from the get go]. Would also say, however, that we don't allow borrower's to complete RE applications themselves, so it would either be on phone or in person, so again...moot for us at least.

Chances are if a person completes an app on line, they have no intentions of coming in to a brick and mortar. So, once again, moot.
Last edited by RR Joker; 11/14/17 01:28 PM.
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#2153406 - 11/14/17 02:05 PM Re: Subsequent collection of Demographic Information niche girl
Adam Witmer Offline
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You bring up some good points, TR, especially when focusing on the term "application."

I think the hang up in this discussion has been two things:1) The lack of definition for "application process", and 2) an apparent discrepancy between the first and last sentences of the cited paragraph.

Therefore, it looks like we will have two camps, from which bankers will have to choose. Let me see if I can get this right:

Camp 1 will make a visual observation only if an LO meets with an applicant in person before the application is complete. This camp looks to the following sentence as it's foundation:

Quote:
"12. If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex.

This sentence states says you must request the DI if the applicant meets in person to complete the application. Therefore, this camp will not require a visual observation if the applicant meets in person to do something other than complete the application.

Camp 2 will make a visual observation any time before the occurrence of an event (which they will have to define internally), such as closing or account opening, the issuance of a CD, or the underwriting decision. This camp looks at the following sentence as their foundation:
Quote:
"If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant's ethnicity, race, and sex."

Camp 2 notes that this statement does not say "If the meeting occurs after the application is received" or "after the application is complete." This camp looks to the new phrase application process. This camp believes that a process is not a one time event, like receiving an application form. By dictionary definition (which I understand doesn't always apply to regulations), a process is "a series of actions that produce something or that lead to a particular result." Camp two looks at the "particular result" which is produced by the process as being something like a loan closing or account opening, the issuance of a CD, or possibly an underwriting decision.

Personally, I sit in camp 2. As David pointed out, I believe this will be the path of least resistance.
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#2153409 - 11/14/17 02:17 PM Re: Subsequent collection of Demographic Information RR Joker
Adam Witmer Offline
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Originally Posted By RR Joker
I think the whole argument is pointless. There is zero way to monitor or prove whether or not an applicant ever graced the premises other than to get their money...bet a dime to a donut most of ours don't [those that don't come in from the get go]. Would also say, however, that we don't allow borrower's to complete RE applications themselves, so it would either be on phone or in person, so again...moot for us at least.

Chances are if a person completes an app on line, they have no intentions of coming in to a brick and mortar. So, once again, moot.


This completely depends on the bank and their processes. I agree that this could be a moot point for some banks, but I have seen many applications where the LO checked several boxes indicating multiple methods of receiving information. When I inquired about this with the LO, it was explained that the applicant started the application online/mail/fax or phone, but then also came into the bank. I've been in several banks that I know this discussion will absolutely apply to. Again, it will all depend on your shop.

Your comment did make me laugh, Joker. I too was thinking about how pointless most compliance debates are...
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#2153418 - 11/14/17 02:44 PM Re: Subsequent collection of Demographic Information niche girl
RR Joker Offline
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Yep. But again, how do you monitor or prove it [ I've NEVER seen nor used more than one check box for how the info on an application was received, not in secondary market nor in-house lending, not to say you 'couldn't' mark multiples crazy
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#2153423 - 11/14/17 03:01 PM Re: Subsequent collection of Demographic Information niche girl
Adam Witmer Offline
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I agree that monitoring is problematic, if not impossible. That said, I have seen the overachiever lender who checks multiple boxes on how the info was received. When that is done, you have to set a procedure to ensure a clean paper trail in the file. That is where this discussion comes in - what is that procedure going to be?

Some shops cannot check multiple boxes due to system limitations, while other shops use paper applications. In my experience, checking multiple boxes is often problematic, though sometimes it is technically correct to check more than one box. Again, it all depends on the shop...
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#2153435 - 11/14/17 03:35 PM Re: Subsequent collection of Demographic Information Adam Witmer
Bville Offline
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In my bank we have been working to get the lenders to provide better documentation in files of conversations and meetings with borrowers. It's likely by reading through file notes we will be able to tell if the lender met with an applicant after receiving the paper application and before loan closing.

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#2153616 - 11/15/17 02:59 PM Re: Subsequent collection of Demographic Information Bville
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Quote:
I think the whole argument is pointless. There is zero way to monitor or prove whether or not an applicant ever graced the premises other than to get their money...bet a dime to a donut most of ours don't [those that don't come in from the get go]. Would also say, however, that we don't allow borrower's to complete RE applications themselves, so it would either be on phone or in person, so again...moot for us at least.

Chances are if a person completes an app on line, they have no intentions of coming in to a brick and mortar. So, once again, moot.

Well said.....I was trying to formulate a post to say exactly this. I don't think lenders get the existing basic process right A LOT of the time.....there is NO way I am going to try to get them to understand the intricacies of deciding when the application process is complete and what to do if the applicant darkens the door of the bank. There are so many pitfalls to that...

And before someone chimes in with the "T" word.....training......well, train until you're blue in the face, go ahead....train repeatedly on the same subject. Beat that dead horse and around and around that bush. Reg C is old. Some lenders don't "get it" as it exists now, because it's simply not a priority with them.
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#2153625 - 11/15/17 03:07 PM Re: Subsequent collection of Demographic Information swiggles
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out of the frying pan...
Originally Posted By swiggles

train until you're blue in the face, go ahead....train repeatedly on the same subject. Beat that dead horse and around and around that bush. Reg C is old. Some lenders don't "get it" as it exists now, because it's simply not a priority with them.


I'm framing this and hanging it on my wall!
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#2153627 - 11/15/17 03:12 PM Re: Subsequent collection of Demographic Information niche girl
David Dickinson Offline
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I don't disagree about this being pointless - most of the time. However, here's my thoughts on Joker's and Swiggles comments:

There is zero way to monitor or prove whether or not an applicant ever graced the premises other than to get their money
I disagree. If an application started online there's evidence of that. Most of our clients document (date stamp) when things are received. While many applicants don't ever come in until closing, some still do.

we don't allow borrower's to complete RE applications themselves, so it would either be on phone or in person, so again...moot for us at least
That may work for you because of your procedure (as Joker said). I'm trying to address this for other clients that don't do it this way.

Swiggles said "there is NO way I am going to try to get them to understand the intricacies of deciding when the application process is complete"
Exactly! This has been my point since this conversation started and why I suggest you make it easy by saying "prior to closing". Another easy way is "prior to issuing the Closing Disclosure" (if applicable). I'm not trying to argue and I'm not trying to debate when the "application process is complete". I'm trying to point out this is a gray area that could be debated with some examiners. Thus, let's keep it simple.

My last point: If you think this is pointless and a moot issue, what if examiners interview your loan officers about this?
_________________________
David Dickinson
http://www.bankerscompliance.com

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