BSAguy makes a good point. It isn't a violation to not check the database, though you would loose your safe harbor. 232.5(a) provides that a creditor may use their own method to determine whether an applicant is a covered borrower. Therefore, conducting due diligence, as BSAguy suggested, is completely permissible though it does loose a safe harbor. I'm not sure I would want to forego too many loans for the safe harbor, but that is going to be a management decision.
"(a) No restriction on method for covered-borrower check. A creditor is permitted to apply its own method to assess whether a consumer is a covered borrower."
Adam Witmer, CRCM
All statements are my opinion, not those of my employer, and should not be taken as legal advice.www.compliancecohort.com