Our bank's in California and we do not usually do HELOCs so not 100% sure what must be included when preparing our loan docs.

For the HELOC application, is it the same as the Uniform Residential Loan App? If say our Borrower is a Trust, then, there shouldn't be anything filled out for age, sex, financial info, etc. correct? For HMDA. And the trustees are the Guarantors, do they sign separately on the Uniform Residential Loan App? And that's where the age, sex, financial info, etc. SHOULD be completed, right? We use LaserPro for the loan docs and when we input the Trustees as Guarantors, they automatically make them as "Co-Borrower." Is that okay?


And for a separate HELOC loan, we have an existing Borrower (a trust), wanting to increase their HELOC. Is "Notice of Right to Cancel" the only disclosure we need?


Thanks.

Bumping this topic in attempt to reword my question.

1. What does the HELOC application need to look like? Our Borrower is a Trust, guaranteed by the Trustees as individuals.

2. Is the Notice of Right to Cancel the only disclosure we need?

Applications are a procedural issue - not a regulatory requirement. Reg B does require a written application for home purchase/refinance loans, but makes it clear that you can use anything you want and the burden is not on the borrower. Rather it's a lender responsibility. Check out the the following:

Regulation B does not… require that the applicant complete a written application. Rather, the responsibility rests with the lender. Even if the applicant does not fill out a written application, the lender can complete an application (form) on behalf of the applicant to comply with Regulation B. [FDIC FIL 35-96]

A creditor will satisfy the requirement by writing down the information that it normally considers in making a credit decision. The creditor may complete an application on behalf of an applicant and need not require the applicant to sign the application. [Commentary to §1002.4(c) #1]

A creditor that accepts applications by telephone for dwelling-related credit… can meet the requirement for written applications by writing down pertinent information that is provided by the applicant. [Commentary to §1002.4(c) #2]

Model application forms are provided in Appendix B to the regulation, although use of a printed form is not required. [Commentary to §1002.4(c) #1]

All of that is to explain that how your institutionalization wants applications completed and/or signed, is up to your organization.

HMDA & Reg B do prohibit you from requiring anyone to be liable, but there are exceptions for guaranties when an entity applies. Trusts are a little unique. They are so close to the consumer that most regulations (like Reg Z) offer Trusts the same protection as a consumer. However, many parts of HMDA say to treat a Trust like an entity. For instance:

Report …the applicant’s or co-applicant’s ethnicity, race, and sex is not applicable when the applicant or co-applicant is not a natural person (for example, a corporation, partnership, or trust). [Appendix B to §1003 #7]

Do not report age …if the applicant or co-applicant is not a natural person (for example, a corporation, partnership, or trust). [Commentary to §1003.4(a)(10)(ii) #4]

Income: Report …not applicable when the applicant or co-applicant is not a natural person (e.g., a corporation, partnership, or trust). [Commentary to §1003.4(a)(10)(iii) #7]

LaserPro should not be automatically considering the trustees as guarantors or as co-borrowers. I would contact LaserPro's attorneys about this and see if you have something set up wrong or why they do that.



Yes, a new RofR is required. To say that this is all you need is a little simplistic and it depends on many factors.

Thanks David.

Also, do we still have "Notice to Cosigner" nowadays? Or has that been opted out, even when your Borrower (a trust) have Guarantors?

Reg AA's Notice to Cosigner was removed some time ago, but there's a UDAAP issue that is similar. If you have a cosigner (someone that is assuming liability without getting benefit), I would provide the Cosigner notice. Most likely, your loan software is going to provide it when necessary.

Thanks again David.

For HELOCs, what disclosures do we need exactly?

If when the Borrower did the 1st mortgage loan with us and we already provided the counselor's list, consumer handbooks, etc. to them, do we need to repeat that, along with the Home Equity Application Disclosure, Early ARM, Fair Lending Notice, Notice of Intent to Proceed?

I'm sorry but if you never do HELOCs maybe you should engage professional compliance help before launching the program. Making the loan is only half the battle. Can you even service a HELOC?