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#743580 - 05/31/07 05:37 PM mortgage application on our website
Lele Offline
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Lele
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We are updating our website and have added a link to a mortgage application. There are no links for the booklets or disclsoures. It is just a "quick mortgage application". This makes me a little uneasy.

Can we just have the application. we say "bring or FAX it in"
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#743671 - 05/31/07 06:17 PM Re: mortgage application on our website Lele
RebekahL CRCM Offline
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RebekahL CRCM
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Big Sky Country
From the Reg Z commentary 226.5(b)(b)(7):

"Applications available by electronic communication. In all cases, a consumer must be able to access the disclosures (including the brochure) at the time the blank application or reply form is made available by electronic communication, such as on a creditor's Internet web site. Creditors have flexibility in satisfying this requirement. For example, if a link is not used, the application or reply form must clearly and conspicuously refer the consumer to the fact that rate, fee, and other cost information either precedes or follows the application or reply form. Alternatively, creditors may provide a link to electronic disclosures as long as consumers cannot bypass the disclosures before submitting the application or reply form. Or the disclosures could automatically appear on the screen when the application or reply form appears. A creditor need not confirm that the consumer has read the disclosures or brochure."
This article has good info, too.
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#744046 - 05/31/07 08:48 PM Re: mortgage application on our website RebekahL CRCM
Lele Offline
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Lele
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Thanks. I feel I have to clarify and see if this changes the answer any. The customer has to either bring the application in or FAX it in after they print it off the website. They cannot send it electronically. Once they bring it in, I am sure the disclosures will be given at that time or within 3 days as necessary.

Also, I did read the link and they mentioned CIP. Again I think with having the customer come in we will do all of our CIP notice. They mentioned putting our CIP on the website.

Thanks
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#744070 - 05/31/07 09:01 PM Re: mortgage application on our website Lele
banjo Offline
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This is from the proposed changes to Reg Z regarding electronic disclosures:

"Section 226.19 Certain residential mortgage and variable-rate transactions Section 226.19(b) requires creditors to provide certain disclosures relating to ARM loans secured by the consumer’s principal dwelling when an application form is
provided to the consumer or before the consumer pays a nonrefundable fee, whichever is earlier. The Board proposes to amend § 226.19 by adding a new paragraph (c) to provide
that if a consumer accesses a ARM application in electronic form, the disclosures required on or with an application for an ARM must be provided to the consumer in electronic form on or with the application. A consumer accesses an ARM application in
electronic form when, for example, the consumer views the ARM application on his or her home computer. On the other hand, if a consumer receives an ARM application in the mail, the creditor would not satisfy its obligation to provide § 226.19 disclosures at that time by including a reference in the application to the web site where the disclosures are located. Comment 19(c)-1 would be added to clarify this point."

The disclosures that this section refers to are the Adjustable Rate Mortgage Truth in Lending program disclosure, and the Consumer Handbook on Adjustable Rate Mortgages booklet (CHARM booklet). These 2 disclosures must be provided at the same time you provide an ARM application to the customer. If the application is provided electronically, then these 2 disclosures will have to be provided electronically. The Fannie Mae application form #1003 has blocks to mark indicating what type of loan the customer wants to apply for - one of which is an ARM loan. It seems if you provide this application online, even if you require the applicant to fax or mail it back, that the ARM disclosure and booklet will have to be provided online as well. (There are similar rules in the proposal regarding HELOC application disclosures as well.)

Last edited by banjo; 05/31/07 09:03 PM.
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#744083 - 05/31/07 09:09 PM Re: mortgage application on our website banjo
Lele Offline
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Lele
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Our application is simple - not an ARM per se. We ask for sales price, loan amount, property address, and then the usual applicant information: income, employment, and monthly obligations & assets.

i appreciate the assistance and just want to make sure we are in compliance.
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#744117 - 05/31/07 09:30 PM Re: mortgage application on our website Lele
RebekahL CRCM Offline
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RebekahL CRCM
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First, for CIP.... I believe you should cover your bases and go ahead and put the notice on your website. Even though the customer cannot actually open the account online, they are obtaining the application there, and might fax it in without ever stepping foot in your branch to see a posted paper notice.

31 CFR 103.121 (the CIP rule for banks) says "Adequate notice. Notice is adequate if the bank generally describes the identification requirements of this section and provides the notice in a manner reasonably designed to ensure that a customer is able to view the notice, or is otherwise given notice, before opening an account. For example, depending upon the manner in which the account is opened, a bank may post a notice in the lobby or on its website, include the notice on its account applications, or use any other form of written or oral notice."

By posting the CIP notice electronically, it is one less piece of paper you'd have to send out later. I don't know about you, but we don't have separate CIP disclosures printed up to distribute to customers -- we just have the posted notices. Will your lending staff remember to send out that piece of paper to faxed loan applicants, when the same step does not have to be taken with anyone else? I doubt it. The headache of trying to get everyone to remember this step is way worse than just linking to the notice on your website.

As for the HELOC/CHARM booklet, I still think you should link to it, expecially if you will accept faxed apps. A footnote in the Reg only allows for the mailing of the disclosure and booklet in certain circumstances. "The disclosures and the brochure may be delivered or placed in the mail not later than three business days following receipt of a consumer's application in the case of applications contained in magazines or other publications, or when the application is received by telephone or through an intermediary agent or broker." The spirit of the regulation is clearly to allow exceptions are for instances when, due to space or bulk limitations, providing the booklet is not possible. However, given the space and resources available on one's website, I don't think the same argument can be made for applications available online.

That's just my $.02!
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#744164 - 05/31/07 09:56 PM Re: mortgage application on our website Lele
RebekahL CRCM Offline
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RebekahL CRCM
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Big Sky Country
Originally Posted By: lele
Our application is simple - not an ARM per se. We ask for sales price, loan amount, property address, and then the usual applicant information: income, employment, and monthly obligations & assets.

i appreciate the assistance and just want to make sure we are in compliance.


But if an applicant uses that form for an ARM loan or a HELOC, you are going to accept it, aren't you? Are you also promoting HELOCs on your site? From the Reg Z commentary:

"2. General purpose applications. The disclosures and a brochure need not be provided when a general purpose application is given to a consumer unless (1) the application or materials accompanying it indicate that it can be used to apply for a home equity plan or (2) the application is provided in response to a consumer's specific inquiry about a home equity plan. On the other hand, if a general purpose application is provided in response to a consumer's specific inquiry only about credit other than a home equity plan, the disclosures and brochure need not be provided even if the application indicates it can be used for a home equity plan, unless it is accompanied by promotional information about home equity plans.

3. Publicly-available applications. Some creditors make applications for home equity plans, such as take-ones, available without the need for a consumer to request them. These applications must be accompanied by the disclosures and a brochure, such as by attaching the disclosures and brochure to the application form."

You can interpret the above as you like, of course, but how badly do you want to defend your position to an examiner? Isn't it really just a whole lot easier to include these two links on your webpage....

CHARM booklet

HELOC Consumer Handbook

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#745107 - 06/01/07 08:06 PM Re: mortgage application on our website Lele
Rather be in Vegas Offline
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Florida
Good topic, we are currently looking into expanding our website and this information is appreciated.

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#745643 - 06/04/07 03:21 PM Re: mortgage application on our website RebekahL CRCM
Lele Offline
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Lele
Joined: Feb 2007
Posts: 825
In the Sun
Thanks and now of course they have changed it to the FNMA form 1003 application so I definitely am 'suggesting' that these disclosures are also on the website.
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