Latest Lending - Reg. B Topics

Adding Co-Borrower After Closing Disclosure

12/09/2018

If an early Closing Disclosure has been issued and the borrower now wants to add a co-borrower, what are the compliance issues that need to be reviewed? Under Reg Z, is there a new 7 day waiting period to close due to a 'new' application' with the co borrower? Do we go off of the date of application of the 'co borrower' or the original primary borrower application? This is not technically a changed circumstance, but if no fees are increased that break tolerances, nor a program change, is there an issue?

Unable to Make Fresh Start Loan: Action Taken

12/02/2018

We currently offer a loan, repayable in six monthly installments at zero percent interest, to help customers bring their checking account to a positive balance. Letters are automatically generated and mailed to customers who may qualify for such loan once their account becomes 30 days overdrawn for $100 or more. Upon receipt of the notification, the customer must call in as directed in the notification (or they can come into the branch) to request the fresh start loan. Their account will be reviewed. If the customer has previously had a fresh start loan with us, we will not make them another fresh start loan. In those situations where a customer requests a fresh start loan and we are unable to make them one, would we owe the customer a Notice of Action Taken? Would Regulation B apply to these fresh start loans?

Principal of Business & Guarantor Confirmation

12/02/2018

Bank policy is to require any principal of the business with 20% or more interest to guarantee a loan. If you have a 5% interest owner decide to guarantee the loan which is not a requirement of the Bank, would a joint intent as the guarantor confirmation be required, or is that only if they are not a principal of the business?

Decline Loan Based on individual’s Criminal Past?

09/09/2018

We have an existing customer that is a home builder. Our customer is partnering with a new individual to purchase and develop a small subdivision. Our preliminary due diligence (do not have a formal application, run a credit report or OFAC) reveals the new individual was convicted of a felony (failure to complete a Form 8300 with a prior mortgage company he owned) and served 7 months in federal prison. Information shows he was well aware of what he was doing in order to facilitate the laundering of money for a drug dealer through his attorney. Can we decline a loan request based upon an individual’s criminal past? We are also trying to measure Fair Lending at the same time here.

New Business Loan App for the New Borrower?

08/12/2018

I have an entity assuming the debt of another to purchase a residential property. Since the loan will be secured by a first lien on a residential dwelling, will I need a new business loan application for the new borrower? Our original business loan application specifies the original borrower.

App Initial Disclosure-Joint Intent Notice (ECOA)

07/29/2018

In our residential mortgage loan application in process, an application was completed (6 pieces of information collected) on 2/28. Our lender mailed out the initial disclosure package on 3/1. This package includes the loan application which contains our joint intent notice. Is this in compliance with ECOA given that the notice was not mailed on 2/28, or is it acceptable to send it on 3/1? "..3. Evidence of joint application. A person's intent to be a joint applicant must be evidenced at the time of application. Signatures on a promissory note may not be used to show intent to apply for joint credit. On the other hand, signatures or initials on a credit application affirming applicants' intent to apply for joint credit may be used to establish intent to apply for joint credit. (See Appendix B.) The method used to establish intent must be distinct from the means used by individuals to affirm the accuracy of information. For example, signatures on a joint financial statement affirming the veracity of information are not sufficient to establish intent to apply for joint credit."

Require Co-Signer on Borrower's First Loan?

07/29/2018

Can a bank require a co-signer on the first loan a borrower has ever had even if they qualify on their own?

Adverse Action- Determined by Product or Amount?

07/22/2018

Is an adverse action/counter offer determined by the loan product or the loan amount? If I am doing an 80% LTV cash out Mortgage refinance (ex: $80K loan on $100K estimated value) but the appraisal value comes in for less than estimated, I now have to change the loan amount to 80% of the actual value (ex: verified value = $90K therefore new loan amount is $72K). Does this mean that I have to do an adverse action/counter offer in addition to re-disclosing an updated loan estimate for the change in loan amount? My product is still the 80% LTV cash out mortgage refinance. My product did not change and I am still giving the borrower cash out that he requested, it just isn't as much as we estimated.

Joint Application-One of Applicants is a Minor

07/15/2018

If the bank receives a joint application but one of the joint applicants is a minor, can the bank deny the loan based on age of one individual (the minor) without facing possible discrimination? Under ECOA an institution may treat credit applicants different when under the age of majority based on state laws. But what if it is joint and the other applicant is of age?

Application Date on the HUD 1003

06/24/2018

What should the application date on the HUD 1003 be based on, the applications definitions for Reg B, HMDA, RESPA & TRID?