Question & Answer

Question: Regulation B contains a requirement that certain loans be taken in writing. If the application is taken over the phone, how do we take it in writing and must we get the applicant's signature on the application?

Answer: The written application requirement in Section 202.5(e) is designed to support the examination process. It is tied to the collection of monitoring data so that all applications subject to collecting and reporting monitoring information will be supported by a written record.

In today's electronic environment, "written" has varied meanings. The Federal Reserve Board staff has been flexible in how this is interpreted. For example, you may take an application over the phone without the applicant being present and not obtain the applicant's signature. The requirement is for the application to be written. The applicant's signature is not required. Section 202.5(e)-1.

When you take applications over the phone, the staff person taking the application creates the written application. The information should be written down as the applicant provides it. It's also a good idea to place a note on the application that it was taken over the phone. This explains the absence of a signature.

As we progress into banking by computer, the Federal Reserve Board is providing interpretations that a data record constitutes a written record. Thus, if an application is sent in over the internet, the data received must be saved and that electronic data constitutes the written application. Section 202.5(e)-3.

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 18 & 19, 12/96