Privacy Disclosure Revisions

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Question:

For Reg. P purposes, do we need to revise our privacy disclosure since we just took on a mortgage company who services our mortage loans? Would this company now be considered an affiliated third party?

Answer:

I'm not sure what you mean when you say, "we just took on a mortgage company who services our mortage loans." For a company to be considered an affiliated third party, your institution must have control (usually ownership) of the mortgage company.

If the mortgage company is an affiliate, you may need to add the affiliate disclosure required by section .6(a)(7) of the Privacy regulations.

If the mortgage company is not an affiliate, then your disclosure may need the section .13 service provider disclosure required by .6(a)(5)of the privacy regulations. However sharing information with a mortgage company that services your loans can also be considered a section .14 exception and does not trigger any change to your privacy disclosure.

Editor's Note: The mortgage company would also be considered a financial institution and, as the holder of the servicing rights on the loans, would be required to furnish its own privacy notice to the borrowers.

First published on BankersOnline.com 3/11/02