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#941965 - 04/14/08 11:33 PM misclassified loan
Baker Offline
Platinum Poster
Joined: Nov 2005
Posts: 777
Washington State
We pulled a loan in our review that was classified as a business loan but was actually consumer. Based on the officer's classification there were many Regulatory disclosures that were not provided, including those required under RESPA and Regulation Z. Does anyone know what our next course of action should be? The loan was made in October of last year, do we need to send out the disclosures and the right of rescission (it does apply in this case)?

Thanks for any help.

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Lending Compliance
#942038 - 04/15/08 12:33 PM Re: misclassified loan Baker
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,710
Bloomington, IN
Sending the ROR now will not cure your error. The borrower has 3 years to rescind the loan. Also sending a TIL disclosure will not cure that error. The stated interest rate becomes the APR and most likely you will have reimbursement due if there were charges that qualified as prepaid finance charges.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#942130 - 04/15/08 02:10 PM Re: misclassified loan Dan Persfull
Baker Offline
Platinum Poster
Joined: Nov 2005
Posts: 777
Washington State
So there is no regulatory requirement to go back and provide the disclosures? We just need to figure out if we understated the APR by more than the allowance and if so we may need to provide reimbursements?

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#948374 - 04/23/08 06:38 PM Re: misclassified loan Baker
complyorelse Offline
Gold Star
Joined: Nov 2007
Posts: 442
U.S.
As long as all applicable disclosures are provided, is there regulatory risk in having a consumer loan classified as a business loan?

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