Lending Disclosures at a Glance

by Mary Beth Guard, BOL Guru

There are more than two dozen different federal disclosures or documentation compliance requirements that can be applicable in the lending context. Sometimes, an employee is taught what to give or complete (or software makes it easy by spitting out the right documents), but the employee doesn't know the source of the underlying requirements. This chart details each of the possible federally-mandated lending disclosures and documentation requirements, broken down by law or regulation.

1. Records Required under the Bank Secrecy Act
   (does not matter whether the credit is to a consumer or a business)
   
   
   • Record of credit over $10,000 not secured by real property
     On each extension of credit not secured by an interest in real property that is in an amount in excess of $10,000, a financial institution must make a record of the name and address of the person to whom the extension of credit is made, the amount thereof, the nature or purpose thereof, and the date thereof. 31 CFR 103.33
     
     
   • CTR for loan payments in cash over $10,000
     When a payment of more than $10,000 is made in cash on a loan, a Currency Transaction Report is required to be filed. 31 CFR 103.22(b)

   
   

2. Disclosures/Records Required under Regulation Z
   (applies only to applications/loans to an individual, primarily for a personal, family or household purpose)

• Early TIL disclosures
  (only when it is a residential mortgage transaction covered by both Reg Z and RESPA) 12 CFR 226.17(f) and 12 CFR 226.19(a)





• Material disclosures
  12 CFR 226.5 & 226.6 (open end credit); 12 CFR 226.5a & 226.6 (credit cards); & 226.5(b) & 226.6 (home equity plans); 12 CFR 226.17 (closed end credit)





• Right of Rescission notice
  (only when a security interest is or will be retained or acquired in a consumer's principal dwelling in a transaction that does not involve financing the acquisition or initial construction. Applies in a refinance by the same creditor only if new money is involved) 12 CFR 226.15 (open end credit); 12 CFR 226.23 (closed end credit)





• ARM loan disclosures
  (transaction secured by the consumer's principal dwelling with a term greater than one year where the APR may increase after consummation) 12 CFR 226.19





• Home Equity Brochure and other HELOC disclosures
  (required only on home equity lines of credit covered under Regulation Z) 12 CFR 226.5b (HELOCS)





• Variable rate disclosures
  (for HELOCS that are variable rate 12 CFR 226.5b(d)(12))

• Written application required
  (A written application is required for an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling) 12 CFR 202.5(e) 12 CFR 202.13





• Notice of incompleteness
  (or, in the alternative, a notice of action taken) 12 CFR 202.9(c)





• Notice of Action Taken
  12 CFR 202.9(a)(2) (consumer applicants); 12 CFR 202.9(a)(3) (business applicants)





• Statement of reasons for adverse action or notice of right to obtain a statement of reasons 12 CFR 202.9(b)





• Copy of appraisal or notice of right to receive a copy of appraisal
  Applies any time an appraisal report is used in connection with an application for credit that is to be secured by a lien on a dwelling. 12 CFR 202.5a

• Standard Flood Hazard Determination Form (internal only)
  12 CFR 208.25;





• Notice of Flood Status
  Required only if the SFHDF indicates the property is in a flood hazard zone. 12 CFR 208.25;





• Forced placement notification
  12 CFR 208.25;





• Notice of servicer's identity (furnished to Director of FEMA)
  12 CFR 208.25;





• Notice of change in servicer (furnished to Director of FEMA)
  12 CFR 208.25;

• Mortgage Servicing Disclosure
  (Not required on subordinate lien loans or HELOCS) 24 CFR 3500.21





• HUD-1
  (Not required on HELOCS) 24 CFR 3500.8





• HUD-1A
  (Not required on HELOCS) Used for refinancings, but creditor may elect to use HUD-1 instead. 24 CFR 3500.8





• Settlement Costs booklet
  (aka "special information booklet") 24 CFR 3500.6





• Good Faith Estimate
  24 CFR 3500.7





• Required Provider Notice
  24 CFR 3500.7(e) [On HELOCS, it is sufficient to supply the HELOC disclosures under Reg Z, Section 226.5b at the time the borrower applies for such loan shall be deemed to satisfy the requirements of this section.]





• Affiliated Business Arrangement Disclosure
  24 CFR 3500.15





• Notice of Transfer of Servicing Rights
  24 CFR 3500.21(d)





• Initial escrow account statement
  24 CFR 3500.17





• Annual escrow account statement
  24 CFR 3500.17

• FCRA notice
  Required if credit is denied in whole or in part based upon information contained in a consumer report. 15 U.S.C. ? 1681m

• Notice to Cosignor
  Must be given in writing to the cosigner prior to becoming obligated 12 CFR 227.14

• Initial privacy notice
  Must be provided not later than when you establish a customer relationship 12 CFR 216.4





• Annual Privacy notice
  Must be provided at least once in each 12 month period during the continuation of the customer relationship. 12 CFR 216.5





• Revised privacy notice
  Required only if you change your privacy practices. 12 CFR 216.8

Related Product:
Lending Compliance Matrices

The original version appeared in the March 2002 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com