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#398442 - 08/09/05 01:56 PM ID in Loan File
Anonymous
Unregistered

I know this has been discussed before but I can't find the thread. What are others opinions regarding identification in the actual loan file? What about for brand new customers, i.e. we have no other identifying info on file? Any thoughts are appreciated.

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Lending Compliance
#398443 - 08/09/05 03:08 PM Re: ID in Loan File
DeeQ Offline
10K Club
DeeQ
Joined: Dec 2002
Posts: 40,766
Turnpike Exit 10
We are still keeping our ID in a separate log with the loan number written on it.
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Get your facts first, then you can distort them as you please. - Mark Twain

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#398444 - 08/09/05 03:24 PM Re: ID in Loan File
DeeQ Offline
10K Club
DeeQ
Joined: Dec 2002
Posts: 40,766
Turnpike Exit 10
ID in or out of loan file?
single choice


Votes accepted starting: 08/09/05 03:24 PM
You must vote before you can view the results of this poll.
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Get your facts first, then you can distort them as you please. - Mark Twain

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#398445 - 08/10/05 02:39 PM Re: ID in Loan File
Anonymous
Unregistered

For those of you keeping identification with the acutal loan...don't you see a fair lending issue that could arise from this practice?

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#398446 - 08/10/05 02:39 PM Re: ID in Loan File
Anonymous
Unregistered

For those of you keeping identification with the acutal loan...don't you see a fair lending issue that could arise from this practice?

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#398447 - 08/10/05 02:39 PM Re: ID in Loan File
Anonymous
Unregistered

For those of you keeping identification with the acutal loan...don't you see a fair lending issue that could arise from this practice?

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#398448 - 08/10/05 02:40 PM Re: ID in Loan File
Anonymous
Unregistered

oops sorry that was excessive

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#398449 - 08/10/05 02:41 PM Re: ID in Loan File
Anonymous
Unregistered

For those of you keeping identification with the acutal loan...don't you see a fair lend

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#398450 - 08/10/05 03:30 PM Re: ID in Loan File
Anonymous
Unregistered

There is not a fair lending issue with keeping a copy of the ID in the loan file. There is only a fair lending issue if the information contained on the ID is used to discriminate. Do you keep your lending staff blindfolded so they can't see the applicants? I didn't think so. So, why would having a photo of the borrower be any different than seeing them face-to-face? OK.... end of rant!

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#398451 - 08/10/05 03:37 PM Re: ID in Loan File
Anonymous
Unregistered

Quote:

There is only a fair lending issue if the information contained on the ID is used to discriminate. Do you keep your lending staff blindfolded so they can't see the applicants? I didn't think so. So, why would having a photo of the borrower be any different than seeing them face-to-face? OK.... end of rant!




Of course they don't get blindfolded, but the person taking the application is usually not the person approving the loan so there is no fair lending issue as that person is truly blind to the applicants ethnicity/race.
Keeping the ID in the file adds fuel to the fact that the applicants identity MAY HAVE BEEN USED in connection with the loan decision. Maybe it's the auditor in me, but I do not agree with keeping ID in the file.

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#398452 - 08/10/05 04:11 PM Re: ID in Loan File
Texas Boy Offline
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Joined: May 2005
Posts: 1,717
Our loan officers not only take the application but they also approve/deny the loans as well. For CIP purposes, we keep a copy of the borrower's driver's license in their loan file. I documented where I received confirmation (from my POC at the Federal Reserve Bank) this practice is acceptable. I agree with anonís rant and I feel that it is extremely ignorant to have to consider fair lending issues for keeping a copy of a driverís license in a loan file. I do not need a picture to tell me what race/sex/etc. an individual (well maybe on a few borrowers!) is. I know from my own personal observation and if I wanted to discriminate against a protected class, I could do so without ever looking at a driverís license. I wish the Fed would come out and say if this is acceptable or not instead of continuing to confuse the hell out of most of us on a subject that I do not consider to be in any way in violation of any fair lending issues.
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#398453 - 08/10/05 10:31 PM Re: ID in Loan File
Lost in a sea of Regs Offline
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Joined: Jan 2005
Posts: 110
Kansas
We are the same as Texas Boy. Our officers both take the app and approve or deny. The FDIC has said that keeping the ID in the loan file will not be a concern to their examiners in regard to a discrimnation issue.
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#398454 - 08/11/05 12:35 PM Re: ID in Loan File
Anonymous
Unregistered

Keeping a driver's license in a file for a loan that is subject to Government Monitoring collection is not that big of a deal...you ask for the information anyway!

However, keeping a copy of a photo ID in a loan file where GMI collection is prohibited could be construed as requesting/collecting GMI when not permitted and be considered a violation of Reg. B

Any thoughts on this perspective?

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#398455 - 08/11/05 01:07 PM Re: ID in Loan File
Cowboys Fan Offline
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Joined: Dec 2002
Posts: 4,605
SC
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#398456 - 08/11/05 02:15 PM Re: ID in Loan File
Texas Boy Offline
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Joined: May 2005
Posts: 1,717
Cowboy Fan, Thanks for the link. Even though I respect David's opinion and advice, like I mentioned earlier, I have confirmation from my POC at the FED that this is an acceptable practice. I would still love for someone to explain the logic in having fair lending issues with keeping a copy of the driver's license in loan files. There is nothing I can get from a drivers license that I could not get from my own personal observation.
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#398457 - 08/11/05 02:43 PM Re: ID in Loan File
Ted Dreyer Offline
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Ted Dreyer
Joined: Apr 2001
Posts: 2,245
The new BSA Exam manual has muddied the waters on this issue. In footnote 40 on page 34 it says:

"Banks are not required to make and retain photocopies of any documents used in the verification process.
However, if a bank does choose to do so, it should ensure that these photocopies are physically secured to
adequately protect against possible identity theft. In addition, such photocopies should not be maintained with files and documentation relating to credit decisions to avoid any potential problems with consumer compliance regulations."
Last edited by Ted Dreyer; 08/11/05 02:44 PM.
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#398458 - 08/11/05 03:00 PM Re: ID in Loan File
buggs Offline
Power Poster
Joined: May 2005
Posts: 8,487
Quote:

The new BSA Exam manual has muddied the waters on this issue.




I think it's downright unfortunate, and quite dissapointing, that the government chose to sidestep this issue instead of dealing with it head on.

Here's a sidenote to all the regulators who read these threads: I understand the politics involved, but darn it, I thought this was an issue of national security. Well, is it? Or isn't it? Make up your minds! You had a chance to set the issue straight, but instead you chose to punt. Shame on you.

Anyway, we keep the documentation in the loan file in most cases. My viewpoint is that we only collect it for originated loans, and we don't make the photocopy until loan closing, so it's not available during the underwriting process.

C'mon, let's be honest, in most cases, *someone* at the bank, whether it's branch staff or a loan officer, has a pretty good idea about the race and sex of the applicant. Whether or not you have a paper trail doesn't change that fact.

The maxim "If it's not documented, it didn't happen" is one of the biggest jokes in the world. Even a child knows better than that.
Last edited by Cooler King; 08/11/05 03:01 PM.
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#398459 - 08/11/05 03:07 PM Re: ID in Loan File
Anonymous
Unregistered

Quote:

The maxim "If it's not documented, it didn't happen" is one of the biggest jokes in the world. Even a child knows better than that.




I disagree. Welcome to the fundamental rule of an auditor. No evidence = it didn't happen.

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#398460 - 08/11/05 08:16 PM Re: ID in Loan File
buggs Offline
Power Poster
Joined: May 2005
Posts: 8,487
Quote:

I disagree. Welcome to the fundamental rule of an auditor. No evidence = it didn't happen.




When I was an auditor I refused to follow that rule of the lemmings. It's just plain dumb, IMHO. Maybe you don't have any any documentation to help explain what actually occured (or didn't ocurr) and why, but you cannot (with any legitimate authority anyway) say it did/did not happen. It's foolish to think otherwise. You've got to look at the evidence, not the documentation. Think, man, think!

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#398461 - 08/12/05 03:24 AM Re: ID in Loan File
Dolly Nugent Offline
Diamond Poster
Dolly Nugent
Joined: Nov 2000
Posts: 1,820
Southern California
This is one of those issues that drives us all crazy. But we all need to recognize that individuals DO discriminate. Discrimination can occur at any time during the term of the loan. If the loan goes south, someone in the collection department may give customers of a certain race a harder time.
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Opinions expressed are my own.

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#398462 - 08/12/05 01:26 PM Re: ID in Loan File
buggs Offline
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Joined: May 2005
Posts: 8,487
Dolly, I hear what you're saying. All I'm trying to communicate is we need to push back on this attitude that the fact that ID photo documentation appears in the file is, in itself, a Fair Lending problem. It's not.
Last edited by Cooler King; 08/12/05 01:27 PM.
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#398463 - 08/12/05 01:46 PM Re: ID in Loan File
Anonymous
Unregistered

I agree with you 100% that in itself it is not a Fair Lending problem. But I think Dolly hit the nail on the head when she said that discrimination can occur anytime...so why add fuel to the fire by keeeping the ID in the file? The problem is it MAY BE construed as a Fair Lending issue with the ID in the file.

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#398464 - 08/12/05 02:54 PM Re: ID in Loan File
Sinatra Fan Offline
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Sinatra Fan
Joined: Jul 2002
Posts: 5,568
New Jersey
Just to play devil's advocate here, wouldn't photo IDs in denied application files be more of a Fair Lending concern? After all, loan files represent loans that you made, not loans that you denied.
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#398465 - 08/12/05 03:09 PM Re: ID in Loan File
DeeQ Offline
10K Club
DeeQ
Joined: Dec 2002
Posts: 40,766
Turnpike Exit 10
Good point, Steve!
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Get your facts first, then you can distort them as you please. - Mark Twain

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#398466 - 08/12/05 04:26 PM Re: ID in Loan File
arye Offline
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arye
Joined: Oct 2004
Posts: 464
Ohio
Here's my .02...I personally think that there are valid arguments for keeping the drivers license in a loan file, as that information is needed for CIP and also the LO can tell by their observation whether or not the borrower is male, female, black, white, etc.

However, where it becomes a potential fair lending issue is when something goes wrong on a loan where the bank is not permitted per Reg. B to collect information about ethnicity, race, sex, etc.. If a customer who is a member of a protected class is charged a higher rate (or other unfavorable terms), goes into default, or the loan is denied (for some examples) and decides to raise a stink about it, the bank is left with information in their loan file that they are not permitted to have in relation to that credit transaction. It could be argued by the customer (or their attorney if its ugly) that the bank used this information in making decisions about their credit account. This is, IMO, where potential fair lending problems come into play.

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