Is anyone obtaining acknowledgment by the applicant for the "Borrowers Bill of Rights" and the "Consumer Caution and Home Ownership Counseling Notice"? Or are you just going to give the applicant both at the time of application?

Just curious... I know my lenders are just thrilled about more disclosures!!

I think we are going to just have the loan officer date it (with the application stuff) and put it in the file, but not require a signature or anything. From what I've seen, that *should* cover the requirements of the law. We'll see.

We've decided to add both to our application packages, rather than seek a signed acknowledgment. (Yes, this is a concession...) FICC News 03-01 points out that a signature isn't required, but it "might not be a bad idea".

Okay, I'll ask the question - what are FICCs? and where do you get them?

FICC is the Financial Institutions Compliance Cooperative, run by Bodman, Longley & Dahling in Cheboygan. There are about 80 members, and we split the cost of Bodman's production of the FICC News, which is published roughly once a month. They have a members-only website that archives the newsletters back about 20 years, as well as their operations and compliance manuals (some of which are still under development).

We signed up with them because they're a good resource for state law issues as well as federal; they offer good seminars (although not often enough); and they have excellent experience in bank law.

Read more about them at www.bankersonline.org (and note that it's .ORG, not .COM) or call Cathy Riley for information about joining - 231-627-4351.

Finally, in the interest of full disclosure: Since we share the cost of this service, more members translates directly to lower cost for everyone, so I have a vested interest in getting you to join. Apart from that all I can say is, this works for my shop. Check it out & make whatever decision works best for you.

Hi Bart;

Ok, now that I thought that I had it all figured out, the FICC 03-02 is issued recently, thus, provided a new opinion on the Section #5 balloon issue of PA 660. So what's the deal? Do our posters feel comfortable in writing balloon payment loans now or do we take the conservative approach? Based on this opinion, I am now leaning towards the acceptable practice of balloon financing. I am just curious to hear your thoughts on the matter or any of our poster friends.

Thanks
Glen

My copy of FICC News 03-02 currently resides in a place of honor on my desk (let's call it a "pile") with other very important documents requiring my attention. I read the advance copy at the MBA meeting last week, and received the real thing sometime over the weekend. I've been considering it, but not acting on it, for over a week now.

The thing I keep getting hung up on is in the statute, and is restated in the FICC article: "...an error in legal judgment with respect to your obligations is not a defense under the Act..."; so if they're wrong, I'm hosed.

When we told our lenders to stop making balloon loans under 5 yrs., it didn't seem to be a big deal - the market isn't demanding them (at least that's my impression). So I'm struggling with whether this opinion is enough to cause me to reverse course in order to make low-demand loans that may or may not be 'illegal'.

I'm inclined to hold off for a few months, and see if our lobbyists can get some clarification written into the statute. Don & Terry understand the issues, and they're in contact with Bodman, Longley. (And if you've read the Act, you know there's a lot of room for clarification...) I intend to let them do their stuff in Lansing, unless my originators see a sudden surge in demand for this product.

Anyone else?

Hi Bart! I also told our lenders to stop making balloon loans with terms of less than 5 years. In light of the new opinion... I am not sharing this new opinion with the lenders. I don't want to flip flop if in fact the opinion will be not to do them once again.

The problem is in commercial lending to an individual (DBA) secured by his home. These loans are subject to PA 660. Many commercial lenders do not want to offer loans as long as five years.