Thread Options
|
Tools
|
#84434 - 06/03/03 12:08 AM
Re: Ambiguous regulations
|
Power Poster
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
|
Well I'll disagree with you on the revenue issue. If it's a business it's a business I think revenue counting is important. But what the heck makes a tiny little $300MM bank a "BIG" bank? Raise the bar to a realistic figure! (sure it will still be smaller than me and I'll be big...but some folks will love it). Oh, and the Investment Test as a whole. It (in the words of my teenage niece) bites!
_________________________
Dawn Coursey VP/CRA Queen
CRA Rating is in...Oh who cares...I'm home with the baby.
|
Return to Top
|
|
|
|
#84435 - 06/03/03 12:17 AM
Re: Ambiguous regulations
|
Diamond Poster
Joined: Nov 2000
Posts: 1,830
District of Columbia
|
Bonnie, The portion of Reg H that deals with consumer protections in sales of insurance does not define insurance! That is why we were all asking, "Is flood insurance covered? Is PMI covered? What the H--- are they TALKING about?!?" BC
_________________________
Being kind is more important than being important.
|
Return to Top
|
|
|
|
#84436 - 06/03/03 12:33 AM
Re: Ambiguous regulations
|
Power Poster
Joined: Jun 2001
Posts: 8,272
Where the heart is
|
Quote:
Well I'll disagree with you on the revenue issue. If it's a business it's a business
The ambiguity is when the borrower is an individual. Individuals do not have revenue. I'm not talking about a sole prop, but there are times when a Business Loan is made to an individual (or even a family trust) for a business or business investment purposes (as opposed to personal, family, household) but there is no specific BUSINESS that goes along with the credit.
The Q&A addresses Sole Props, but I'm talking about people that do not have a schedule C. Perhaps they have serveral K-1's, and they also control several closely held corporations. But the borrower is the individual and NOT the partnerships or coroporations.
Another common situation is where a commercial real estate loan is made to a family trust. The property may be used, in whole or in part, by a corporation/LLC/partnership, etc. that is owned by the trustor of the trust, but the loan is not guaranteed by the company. Also, IF the loan is guaranteed by the company, is that company considered an "affiliate?"
So - would the revenues be $-0-, or the actual "income" of the individual, or the revenues of all of the business that this individual is a part of - even though the businesses are not guarantors? Or should the revenue be "N/A." My biggest issue with all of this is if one bank goes by "N/A" since REVENUE truly wasn't a consideration, will that bank be at a disadvantage when all of the peers in its Assessment Area used a Revenue code of "1"?
IMHO, this is where the actual lending practices were not really reviewed by the people who wrote the data collection rules. Too many round holes vs. square pegs.
_________________________
CRCM,CAMS Regulations are a poor substitute for ethics. Just sayin'
|
Return to Top
|
|
|
|
#84439 - 06/03/03 01:20 AM
Re: Ambiguous regulations
|
Power Poster
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
|
Hey Bonnie? Revenue codes an anoyance to you as well? tee hee hee I'd agree...somewhat, but I still think if you trace a file in deep enough you can find some revenue that will allow a determination if it's a small business or a large business. Quote:
...but there are times when a Business Loan is made to an individual (or even a family trust) for a business or business investment purposes (as opposed to personal, family, household) but there is no specific BUSINESS that goes along with the credit.
Sure it's a stretch sometimes, but I'd lean on the revenues of the business they're investing in. If they're professional investors (lets say they're showing limited partnerships in 30 limited liability companies) I'd say they're in the business of "investing" and use their gross returns from the shares. It's still more "business" than consumer isn't it?
Quote:
Another common situation is where a commercial real estate loan is made to a family trust. The property may be used, in whole or in part, by a corporation/LLC/partnership, etc. that is owned by the trustor of the trust, but the loan is not guaranteed by the company. Also, IF the loan is guaranteed by the company, is that company considered an "affiliate?"
In this case, gross rents on the property would be my revenue code determiner. If they don't pay a lease, and use the property themselves...unless the trust is in the business above (investors again) then I'm going back to that issue.
Ok it's complicated, and yes, having this ruling determined by someone who's never opened a credit file (feds sheesh!) gets annoying. I'm with ya there.
But what's more annoying is when the commercial lender books a deal as a small business loan (unsecured to purchase stock) to a doctor for personal reasons...but didn't bother with those pesky consumer disclosures...
_________________________
Dawn Coursey VP/CRA Queen
CRA Rating is in...Oh who cares...I'm home with the baby.
|
Return to Top
|
|
|
|
#84443 - 06/03/03 10:48 PM
Re: Ambiguous regulations
|
Power Poster
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
|
I know Bonnie, it's frustrating, and probably never will be solved. I just make sure to back up my revenue code decisions when I find situations like this with good documentation. I probably argue more with the lenders than I do examiners I have a wonderful examiner who actually thinks I know what I'm doing And he's never out to make a name for himself by beating up on me! (And he's handsome and wise and a snappy dresser.....ok i'm sucking up, I've got an exam in the near future) I think the key with revenues is to at least be consistent in these cases. Since theres wiggle room in both directions, as long as you wiggle only to the left, or right, you have a case to give a complaining examiner a debate about the code used. But since most folks who do revenue code reveiws have never done any lending...I think the examiners see too much wiggling back and forth, and try to pick some line for people to wiggle towards. That's a very wiggly comment isn't it? It's lovely outside today and I guess I feel like going out and doing the Hula on the beach or something
_________________________
Dawn Coursey VP/CRA Queen
CRA Rating is in...Oh who cares...I'm home with the baby.
|
Return to Top
|
|
|
|
#84444 - 06/04/03 02:53 PM
Re: Ambiguous regulations
|
100 Club
Joined: Sep 2002
Posts: 162
Iowa
|
Quote:
Yes, but its a relative thing at 90 million in assets they are probably dealing with 10-15 loans a month.
Hey what do you mean 10 to 15 loans per month...We're a $90MM bank and process closer to 150 loans per month. Now I know that's not much by some standards but you make it sound like there's not much going on at a $90MM bank.
|
Return to Top
|
|
|
|
|
|