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#2240319 - 07/29/20 03:35 PM Application dated after loan origination
Christy C Offline
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Joined: Apr 2020
Posts: 35
Our Internal Auditor has found several loans made where the application is dated after the origination date. My mind is whirling with the potential regulatory implications with regard to disclosures, consent to pull credit, and a slew of other things. I'm asking you experts to give me some specific guidance on the regulations relevant to this situation.

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Lending Compliance
#2240320 - 07/29/20 03:41 PM Re: Application dated after loan origination Christy C
John Burnett Offline
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John Burnett
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Cape Cod
What types of loans?

Also, are they all handled by the same lender(s)? I've seen situations where late applications were involved in fraudulent loans to non-existing borrowers.
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#2240323 - 07/29/20 03:46 PM Re: Application dated after loan origination Christy C
Christy C Offline
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Joined: Apr 2020
Posts: 35
Consumer loans, different lenders.

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#2240327 - 07/29/20 03:59 PM Re: Application dated after loan origination Christy C
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Several things come to mind.

When was a permissible purpose established to obtain the consumer report?
Were the required risk based pricing notice or exception notice provided (no later than at or before consummation)?
Are any of these consumer loans HELOCs (HELOC Plan Disclosures)?
If you offer credit insurance were the proper 343.40 disclosures provided?
Were any required State disclosures properly disclosed within their timing requirements?
Are any of the loans covered under the MLA?
What does your loan policy require?
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#2240329 - 07/29/20 04:06 PM Re: Application dated after loan origination Christy C
rlcarey Online
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rlcarey
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Galveston, TX
Outside of the compliance issues, what really needs to happen is someone needs to figure out exactly why and how this has happened. As John pointed out, compliance issues may be the very least of your worries.
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#2240334 - 07/29/20 04:26 PM Re: Application dated after loan origination Christy C
Christy C Offline
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Joined: Apr 2020
Posts: 35
Agree with all of your comments! It doesn't appear to be a systemic issue but enough of an issue to keep close watch for sure.

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#2240337 - 07/29/20 04:32 PM Re: Application dated after loan origination Christy C
Richard Insley Online
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Richard Insley
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Toano, VA
Originally Posted by Christy Campbell
the application
Do you mean "the application"...form? What if "the application" occurred casually and the lender insisted on a nice neat typed form in place of the original long-hand scribble? Very likely the signature line on "the application" just says "date" or something else that would cause the applicant to date the "official" application form on the date is is actually signed, not the as-of date (when the scribble was handed to or written by the loan officer.) If you're actually looking at replacement documents with cosmetic enhancements, the information used to process the request (and order the CBR) was actually received days or weeks earlier. The day the bank received the original scribble is the application date. Certainly, you need to know that date (for all the reasons discussed above.) Maybe this boils down to policy/procedure infractions, not regulatory violations?
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