Skip to content
GeoDataVision
Thread Options
#474441 - 12/22/05 10:54 PM Why I have a job.....
02bonne Offline
Platinum Poster
Joined: Nov 2005
Posts: 620
I just found out that our LO's have been requiring a copy of the customer's driver's license at closing for permanent keeping in the loan file....which I don't think is illegal, definitely presents some ECOA and CRA issues (potentially). Also our correspondents have been requesting them for CIP and other purposes. I perceive this as a major problem and am thinking about having every driver's license copy pulled from every file before examiners see this. What is everyone else's opinion? Any other ideas?

Return to Top
Lending Compliance
#474442 - 12/22/05 11:50 PM Re: Why I have a job.....
flaire Offline
100 Club
flaire
Joined: Sep 2005
Posts: 228
sw us
The ID requirements that CIP mandates is in conflict with ECOA. We asked our examiners about it and they understand the catch 22 banks are now in. This is what our examiners suggested:

Get the ID info at closing - after the credit decision is made - and date stamp it "received mmddyyyy."
_________________________
Hello, triple a? I got locked out of my mind...

Return to Top
#474443 - 12/22/05 11:51 PM Re: Why I have a job.....
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,503
On the Net
It isn't a regulatory violation to have it. It is a violation to use it for a discriminatory purpose in the underwriting, processing, collection or other process of the loan.

If there is a claim of discrimination against you, this will more likely hurt than help.

Many who collect this separate it from the loan file, and that is OK too. It isn't a requirement to have it, not have it or separate it from the loan files.

Look for past posts from David D and I on this. We asked each agency at the ABA NRCC a few years ago about this and none said it was a problem.

Your state laws and internal procedures may factor in otherwise.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#474444 - 12/23/05 01:40 AM Re: Why I have a job.....
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,281
This is something that has always driven me crazy. When bank employees take credit applications in person or over the phone, do they cover their eyes and ears so that they don't know the race or gender of the applicant? Of course not. If your customer does not wish to provide required monitoring information for face-to-face HMDA loans, does your staff properly complete the information based on observation? Of course they do (I hope). And that information is in the files.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#474445 - 12/23/05 02:05 PM Re: Why I have a job.....
Reed Offline
Diamond Poster
Reed
Joined: Sep 2005
Posts: 1,251
West Coast
Aren't you from WI? If so it is not illegal to get a copy of the drivers licence but it is to keep a file of them. In other words, you can copy it and pass it around (for example between branches) but when you are done with it you cannot keep the copy. CIP does not require you to have a copy of the DL, only to document that you verified it. We were told by Wipfli (an external firm we hire for some of our audits) to remove all DL photo copies from both loan and CIP files.

Return to Top
#474446 - 12/23/05 02:33 PM Re: Why I have a job.....
Reed Offline
Diamond Poster
Reed
Joined: Sep 2005
Posts: 1,251
West Coast
http://www.dot.wisconsin.gov/library/research/law/wisrules.htm#driverlicensing

It took me a while to find this but here you go. Click on Drivers Licencing and Regulation, Trans 102.205. The key phrase is "paper library"

Return to Top
#474447 - 12/23/05 02:50 PM Re: Why I have a job.....
02bonne Offline
Platinum Poster
Joined: Nov 2005
Posts: 620
Quote:

This is something that has always driven me crazy. When bank employees take credit applications in person or over the phone, do they cover their eyes and ears so that they don't know the race or gender of the applicant? Of course not. If your customer does not wish to provide required monitoring information for face-to-face HMDA loans, does your staff properly complete the information based on observation? Of course they do (I hope). And that information is in the files.




This is true, however our underwriters don't meet the customer and they make the credit decisions. Loan officers are the only people that have contact with the customers. If any issue of discrimination came up, I don't want the underwriters to have any non-vital information.

Return to Top
#474448 - 12/23/05 03:09 PM Re: Why I have a job.....
02bonne Offline
Platinum Poster
Joined: Nov 2005
Posts: 620
Quote:

Aren't you from WI? If so it is not illegal to get a copy of the drivers licence but it is to keep a file of them. In other words, you can copy it and pass it around (for example between branches) but when you are done with it you cannot keep the copy. CIP does not require you to have a copy of the DL, only to document that you verified it. We were told by Wipfli (an external firm we hire for some of our audits) to remove all DL photo copies from both loan and CIP files.




I am from Wisconsin. Where in 102.205 does it say that you can't keep the drivers license (provided we don't keep a library of images)? Not that i'm disagreeing, just wondering where you found that info because i'm not reading that in 102.205. Maybe I just haven't had enough caffeine yet today.

Return to Top
#474449 - 12/23/05 03:19 PM Re: Why I have a job.....
Reed Offline
Diamond Poster
Reed
Joined: Sep 2005
Posts: 1,251
West Coast
a "library of images" is what keeping photocopies in files is (does that make sence?)

The way I read it is that you can use it, but then you gotta lose it.

My experiance with this issue was that someone at my FI said "it's against the law to photocopy a DL" I said "really, show me" They couldn't, so I e-mailed the DOT and they linked me to the above.
Last edited by Smithy; 12/23/05 07:40 PM.
Return to Top
#474450 - 12/23/05 03:32 PM Re: Why I have a job.....
02bonne Offline
Platinum Poster
Joined: Nov 2005
Posts: 620
Quote:

a "library of images" is what keeping photocopies in files is (does that make sence?)





I guess I read it a little differently. It seemed to me that a "paper library of images" referred to a centralized collection point of DL copies. I would imagine this would be prohibited because of a discrimination issues. I think if they wanted to forbid keeping a copy they would have worded it much differently (simpler). I will call the DOT and get a ruling on this.

Thanks for the info Smithy! Also, do you have the brief interpretation in email form?

Return to Top
#474451 - 12/23/05 03:34 PM Re: Why I have a job.....
Reed Offline
Diamond Poster
Reed
Joined: Sep 2005
Posts: 1,251
West Coast

Let me know what you find out from the DOT
Last edited by Smithy; 12/23/05 07:39 PM.
Return to Top
#474452 - 12/23/05 03:35 PM Re: Why I have a job.....
Reed Offline
Diamond Poster
Reed
Joined: Sep 2005
Posts: 1,251
West Coast
PS. Since when is WI law simple?

Return to Top
#474453 - 12/23/05 03:57 PM Re: Why I have a job.....
samsara Offline
100 Club
Joined: Mar 2004
Posts: 102
New York
At an FDIC roundtable in NYC last summer they told us to get them out of the file (we only used them for ID for indirect auto loans, as none of us see the customer). It didn't matter any more that they came in with the closing package. The ECOA concern has moved to possible discrimination on the part of Loan Servicing or Collections staff who might see the customer's picture in the file after the loan is on the books. Our NYS examiners had no problem with it on their recent visit, and the FDIC accepted it in 2003, but times have changed and they said they now consider a license with a photo in the file to be a problem. We have moved to reviewing the license and documenting the number etc. on a form after the closing package is received from the dealer. Then the license copy is shredded.

Return to Top
#474454 - 12/23/05 04:21 PM Re: Why I have a job.....
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,503
On the Net
The pendulum swings. And not at the same rate for all the agencies nor all the regions of any one agency.

It keeps life interesting, doesn't it.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#474455 - 12/23/05 05:16 PM Re: Why I have a job.....
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:

I just found out that our LO's have been requiring a copy of the customer's driver's license at closing for permanent keeping in the loan file....which I don't think is illegal, definitely presents some ECOA and CRA issues (potentially). Also our correspondents have been requesting them for CIP and other purposes. I perceive this as a major problem and am thinking about having every driver's license copy pulled from every file before examiners see this. What is everyone else's opinion? Any other ideas?



As Andy stated, this is NOT an ECOA violation. We've been down this road many times and have always come out clean, but many examiners don't like it, all the same.

However, you need to know that the new FFIEC BSA Exam manual indicates you cannot keep copies of DL's in loan files. See footnote #40 on page 34 of the BSA manual.
-----------------------------------------------------------

Quote:

40 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.


_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#474456 - 12/23/05 05:44 PM Re: Why I have a job.....
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,672
Galveston, TX
Quote:

However, you need to know that the new FFIEC BSA Exam manual indicates you cannot keep copies of DL's in loan files.




I think the footnote say "should not" - not "may not".

It's my premise that you want to capture this information at some sort of customer level and not at the individual account level anyway - due to the retention requirements. If you have your CIP information in the loan file and you open a new deposit account several years down the road and use the existing customer exception - the loan pays off and the file is then destroyed after 5-7 years - there goes your CIP documentation for your deposit account.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#474457 - 12/23/05 08:24 PM Re: Why I have a job.....
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I don't think I want to get into a discussion/argument with an examiner over the "should not" vs. "may not" verbiage. If you have been here at BOL very long, you know that I'm in the "it's OK to copy DL's camp", but I wanted to point out that the new BSA manual has this wording.

I agree - why would you want to keep the DL in a credit file anyway?
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#474458 - 12/23/05 09:50 PM Re: Why I have a job.....
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,503
On the Net
Thanks for the info and link.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#474459 - 12/27/05 04:31 PM Re: Why I have a job.....
02bonne Offline
Platinum Poster
Joined: Nov 2005
Posts: 620
I spoke with a chief examiner from the Chicago FDIC office and he said while there is no prohibition against making the photo IDs, the risk was greater with the fair lending issues that it caused than the benefits, so their stance was that they wouldn't recommend this practice. He said if there are any fair lending issues noted (high turndowns of protected classes etc.), they may use it against you.

For WI bankers, the jury is still out on the "libarary of images" regulation. No word back yet from the DOT.

Return to Top

Moderator:  Andy_Z