Page 1 of 4 1 2 3 4
Thread Options
#269969 - 11/02/04 08:16 PM Reg B Joint Intent
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
For credit card applications we seldom see the applicants. The applicants are not checking the box for intent to file jointly/not file jointly. Is anyone else having problems with this? If so, what are you doing to comply?
_________________________
Opinions are my own and not of my employer.

Return to Top
Lending Compliance
#269970 - 11/04/04 10:05 PM Re: Reg B Joint Intent
Anonymous
Unregistered

I am not signed in because of what I am about to write. The lenders at the bank I work at seem to not understand the importance of having their customers initial that they are applying jointly. We then give them the opportunity to send the customers a form to intital to fulfill that requirement. This is done AFTER the loan closes. I don't think what we are doing is OK. I think I would rather they not have it than do it this way. Any thoughts?

Return to Top
#269971 - 11/04/04 10:10 PM Re: Reg B Joint Intent
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
It's probably not ok, but I don't have any better suggestion.
_________________________
Opinions are my own and not of my employer.

Return to Top
#269972 - 11/05/04 02:43 AM Re: Reg B Joint Intent
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:

I am not signed in because of what I am about to write. The lenders at the bank I work at seem to not understand the importance of having their customers initial that they are applying jointly. We then give them the opportunity to send the customers a form to intital to fulfill that requirement. This is done AFTER the loan closes. I don't think what we are doing is OK. I think I would rather they not have it than do it this way. Any thoughts?



Evidence of intent to apply must be done at the time of application.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#269973 - 11/05/04 01:41 PM Re: Reg B Joint Intent
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
What do we do if the applicant does not complete that portion of the application? Do we have to call? If so, do we have to talk to each person on the application?
_________________________
Opinions are my own and not of my employer.

Return to Top
#269974 - 11/05/04 02:52 PM Re: Reg B Joint Intent
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,036
Toano, VA
I would halt processing of the application until you know who's applying. If you're going to call, you would need to speak to each party who's listed as an applicant but who has not signed or initialed an "I'm an applicant" statement.
_________________________
...gone fishing.

Return to Top
#269975 - 11/05/04 07:53 PM Re: Reg B Joint Intent
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:

What do we do if the applicant does not complete that portion of the application? Do we have to call? If so, do we have to talk to each person on the application?



There is no requirement to get the applicant to sign an application or evidence form. The loan officer can document how the applicants wish to apply. How else would you do this at the time of application for phone applications. You also do not need to talk to each applicant.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#269976 - 12/09/04 05:38 PM Re: Reg B Joint Intent not intialed
Patsy Cline Offline
Diamond Poster
Patsy Cline
Joined: Sep 2002
Posts: 1,117
On the road...
So... if the loan gets all the way to set-up and there is no evidence of joint intent... what are you doing? Nothing?
_________________________
Michelle CRCM

"What would you attempt to do if you knew you could not fail?" ~ unknown


Return to Top
#269977 - 08/18/05 08:05 PM Re: Reg B Joint Intent
Anonymous
Unregistered

I agree that if you did not get the evidence of intent to apply jointly at application it is a violation, and cannot be "fixed" after the fact. My question is if this is cited in an examination, what can the examiners require the bank to do for a loan that does not the evidence on the application? Could they force the bank to release the coapplicant from the loan? Would this be dependent on who the examiner is (Fed, OCC, FDIC)?

Return to Top
#269978 - 08/18/05 09:23 PM Re: Reg B Joint Intent
GenerousLife Offline
Diamond Poster
Joined: Feb 2002
Posts: 1,466
USA
The intent of the change to Reg B was to affirmatively KNOW that the joint applicants agree to be joint applicants, how can you know this without hearing that from each borrower? One person cannot attest for the other, that's how we got this rule in the first place.

When our lenders fail to collect the information, they receive a Compliance Exception that is reported to the Board of Directors for the life of the loan. Same report that examiners see when they come in.
_________________________
"No problem can withstand the assault of sustained thinking." ~ Voltaire
"Sustained thinking gives me a headache." ~Me

Return to Top
#269979 - 08/18/05 09:40 PM Re: Reg B Joint Intent
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:

The intent of the change to Reg B was to affirmatively KNOW that the joint applicants agree to be joint applicants, how can you know this without hearing that from each borrower? One person cannot attest for the other . . .



I believe that this is incorrect. One person CAN attest for another.

Are you telling me that if you receive a phone application from me and I say "my wife and I would like to apply for a car loan" and give you all of the necessary information, you would say "please put down the phone and put your wife on the phone. I must hear her say that she wants to apply before I can process your application"?

Since 202.7(d)(1) requires the evidence of intent to apply . . .at the time of application . . .", you must have some type of evidence when I call. How are you going to do that?

Are you going to say that you haven't received an application until you hear or see an individual attestation from my wife? If so, I believe your bank is not in compliance with Regulation B and the definition of "application". Applications can certainly be verbal.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#269980 - 08/19/05 01:02 PM Re: Reg B Joint Intent
Anonymous
Unregistered

Even though a technical Reg B violation like the ones being discussed here cannot be completely "fixed" after the fact and once it is cited in an examination, are there any steps that can be taken to mitigate the potential damage done by the citation, such as obtaining such documentation directly from the co-borrowers after the fact, to minimize the extent of the examiner's scrutiny?

Return to Top
#269981 - 08/19/05 01:16 PM Re: Reg B Joint Intent
DDB Offline
100 Club
DDB
Joined: Oct 2003
Posts: 170
I agree with David. I spoke with one of the attorneys at the Federal Reserve Board back when the change was implemented. He told me that one applicant can initial the evidence of intent on behalf of the other applicants. He also said that, in the case of a phone application, one applicant can state the intent verbally on behalf of the others.
_________________________
Any statements or opinions are mine, not necessarily my employer's.

Return to Top
#269982 - 08/19/05 02:38 PM Re: Reg B Joint Intent
GenerousLife Offline
Diamond Poster
Joined: Feb 2002
Posts: 1,466
USA
To those who advocate that one applicant can attest for another, I respectfully disagree.

Why did this change to Reg B come about in the first place? Because there were situations where unwilling spouses were obligated on loans, either by a loan officer assuming that both were applicants or by a spouse who did not consult the unwilling spouse until it was time to sign the note.

Hence, Reg B changes. This provision protects a less-than-willing spouse from getting caught up in the circumstances.

A creditor might assume (in error), based on submission of a joint balance sheet, or from the statements from the applicant, that the applicant's spouse (who is absent) intends to be a co-borrower. (Same applies in a phone application situation.)

When the creditor calls the borrowers to appear at the closing, the absent spouse learns for the first time that he or she is expected to show up and sign. A spouse who is not assertive or not very sophisticated financially might actually sign the documents (without wanting to do so), believing that if he/she has been summoned to the closing, there is no other choice.

You used to see this happening most often in the Ag Lending area, where Farmer John, says "Me and my wife want to buy this new tractor." When Mrs. John is called to the closing, it is the first she's heard of the new tractor (which is being delivered the same day). She's been planning to leave her jerk of a husband (maybe because of this very attitude) and she doesn't want to be obligated on one more loan.

In our institution, if the application does not reflect both borrowers in their own hand, or it is a verbal application, we accomplish this with a quick phone call to the possible co-borrower and document in the file.

(Portions of my response taken from an article written by Charles Cheatham, VP and General Council of the Oklahoma Bankers Association.)

BTW, I applied for a loan today and told them that David was my co-borrower. That's OK with you isn't it? (I love you David.)
_________________________
"No problem can withstand the assault of sustained thinking." ~ Voltaire
"Sustained thinking gives me a headache." ~Me

Return to Top
#269983 - 08/19/05 02:45 PM Re: Reg B Joint Intent
Anonymous
Unregistered

If our online applications require the applicant(s) to select "single" or "joint" does that indicator if Joint suffice? Also, since we will probably not have direct contact with the borrowers until the signing of the note, should the file contain any other evidence? Should we require the applicants to sign the application indicating their intent like is required by the bank for all direct (face-to-face) applications?

Return to Top
#269984 - 08/19/05 03:01 PM Re: Reg B Joint Intent
rainman Offline
Power Poster
rainman
Joined: Nov 2004
Posts: 3,058
Generous, I'll respectfully disagree with your respectful disagreement. I think you're mixing two different issues: evidence of intent (which the Reg. requires) and verification of intent (which the Reg. does not require).

The point of the changes is that the Bank can't simply rely on the fact that it's looking at a joint financial statement and assume that both persons shown on the financial statement are asking for credit. As you point out, this problem was seen most clearly and often in the context where applicants are not filling out an "application" but are simply supplying the bank with financial statements. But where you do have an application that specifically states "we're applying for joint credit," you have the necessary evidence.

The Reg. was not intended to "police" dishonest applicants by requiring lenders to have actual contact with each applicant at the time of application. It is intended to ensure that if the spouse is surprised that he/she has to sign loan docs at closing, it's because the other spouse was hiding it, and not because the bank simply made a bad assumption.
_________________________
Nobody's perfect, not even a perfect stranger.

Return to Top
#269985 - 08/19/05 03:18 PM Re: Reg B Joint Intent
DDB Offline
100 Club
DDB
Joined: Oct 2003
Posts: 170
I'll second Rainmain's statements. The change in the commentary to Reg B which required better evidence of the applicants' intent was to protect customers from banks, not to protect customers from each other. While it would certainly be better to get evidence from all joint applicants when you can, I still don't believe you are required by Reg B when the initial contact is with one applicant. In those cases the one applicant can answer on behalf of the others.
_________________________
Any statements or opinions are mine, not necessarily my employer's.

Return to Top
#269986 - 08/19/05 03:45 PM Re: Reg B Joint Intent
Anonymous
Unregistered

Face it guys, Generous is right.

Return to Top
#269987 - 08/19/05 04:33 PM Re: Reg B Joint Intent
rainman Offline
Power Poster
rainman
Joined: Nov 2004
Posts: 3,058
Quote:

Face it guys, Generous is right.




well spoken, a logical argument
_________________________
Nobody's perfect, not even a perfect stranger.

Return to Top
#269988 - 08/19/05 04:55 PM Re: Reg B Joint Intent
Anonymous
Unregistered

Quote:

I agree that if you did not get the evidence of intent to apply jointly at application it is a violation, and cannot be "fixed" after the fact. My question is if this is cited in an examination, what can the examiners require the bank to do for a loan that does not the evidence on the application? Could they force the bank to release the coapplicant from the loan? Would this be dependent on who the examiner is (Fed, OCC, FDIC)?



I appreciate the comments that have been made but I'm afraid that my original question has not even been addressed. I was asking if once it has been established that there is a violation, can a regulator make the bank release the comaker on the loans where the notice was not given. Does anyone have any personal experience in this situation?

Return to Top
#269989 - 08/19/05 05:08 PM Re: Reg B Joint Intent
rainman Offline
Power Poster
rainman
Joined: Nov 2004
Posts: 3,058
I'm sure there are examiners who think they could do this, but that would be grossly inappropriate. They could write you up and (if they wanted to take it that far) impose penalties for violations. But if you had examiners who actually want you to release coborrowers because of this error, I would definitely push back, and take it "up the chain" if necessary.
_________________________
Nobody's perfect, not even a perfect stranger.

Return to Top
#269990 - 08/19/05 05:15 PM Re: Reg B Joint Intent
GenerousLife Offline
Diamond Poster
Joined: Feb 2002
Posts: 1,466
USA
I have no experience with what happens when a violation has been established. (Thank goodness.)

Reg B allows for fines and civil redress. CMP of $25,000 per occurrence per day by the regulator. If proven willful, then it goes up to $1,000,000 per violation per day. Civil liability awards include actual and punitive damages as well as possible Class Action Suits. (This is for Reg B violations as a whole, not just this particular subject.) You might find it easier to release the co-borrower and stop the flow of blood.
_________________________
"No problem can withstand the assault of sustained thinking." ~ Voltaire
"Sustained thinking gives me a headache." ~Me

Return to Top
#269991 - 08/19/05 05:52 PM Re: Reg B Joint Intent
DDB Offline
100 Club
DDB
Joined: Oct 2003
Posts: 170
Quote:

Quote:

Face it guys, Generous is right.




I can certainly agree with the spirit of Generous Life's comments, and I wouldn't want our lenders to be involved in transactions where one of the borrowers was not signing of his or her own free will. But I still stand behind my earlier statements that the federal banking regulatory structure in general, and Reg B in particular, are not designed to protect people from their own spouses or anyone else other than the financial institution. Reg B prohibits the bank from requiring a spouse or other party to become obligated on the note when the other applicant qualifies for the loan on his/her own. But Reg B does not require the bank to make sure one spouse doesn't pressure the other into a transaction, especially if they do so someplace other than in our presence where we could explain whose signature is and isn't needed to qualify for the loan.
_________________________
Any statements or opinions are mine, not necessarily my employer's.

Return to Top
#269992 - 08/19/05 05:57 PM Re: Reg B Joint Intent
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,649
Galveston, TX
The regulators have and will make you release borrowers if they uncover spousal signature violations. Been there - done that personally with the FRB, OCC and OTS. If you uncover a signature violation, I would recommend that you be proactive and automatically release the party who's signature was obtained illegally.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#269993 - 08/19/05 06:19 PM Re: Reg B Joint Intent
Anonymous
Unregistered

Quote:

What do we do if the applicant does not complete that portion of the application? Do we have to call? If so, do we have to talk to each person on the application?



There is no requirement to get the applicant to sign an application or evidence form. The loan officer can document how the applicants wish to apply. How else would you do this at the time of application for phone applications. You also do not need to talk to each applicant.




Our FDIC regulator just left; they said that we WOULD have to speak with each applicant to verify intent to apply for a phone application. Clearly the regulation does not require this, but has any agency come out with some specifics? If not, how can I convince my regulator otherwise?

Return to Top
Page 1 of 4 1 2 3 4

Moderator:  Andy_Z