Answer by David Dickinson
Any time you have a request for credit, you can have an application. If you are referring to a piece of paper that documents the application, you don't have to have one every time. In fact, Section 202.5(e) discusses the requirement to have written applications, but it never makes it apply to all types of credit. The Commentary to Section 202.5(e) #1 states:
The requirement of written applications for certain types of dwelling-related loans (purchase or refinance of the borrower’s principle dwelling and secured by the dwelling) is intended to assist the federal supervisory agencies in monitoring compliance with the ECOA and the Fair Housing Act. Model application forms are provided in appendix B to the regulation, although use of a printed form of any kind is not required. A creditor will satisfy the requirement by writing down the information that it normally considers in making a credit decision. The creditor may complete the application on behalf of an applicant and need not require the applicant to sign the application.
I think that it is prudent to always have documentation of a credit request - either the loan officer's notes or a formal written application by the applicant. I suggest that your policy state as much.
Answer by John Burnett
And don't forget that BSA regulations require the bank to retain a "statement of purpose" for all loans over $10,000 not secured by real estate.
First published on BankersOnline.com 3/3/03