08/01/2002
HUD has published a proposal to make significant changes to the Good Faith Estimate that lenders issue within three days of taking an application. HUD calls this a "simplification" of the GFE.
07/15/2002
Our Consumer Lending unit received the following response to a recent audit. "According to the regulation, a bank may pull a credit report on a person if they have a permissible purpose. An application for credit is considered a permissible purpose. When the Contact Centers take applications over the telephone (he doesnt mention anything about the Internet) they are only speaking with one of the applicants, but if the application is joint, credit bureaus aer obtained for both applicants. Without talking to the joint applicant, the bank can not be sure that the second individuaal is aware of, or wants to apply for a loan. If a co-applicant does not want to be an applicant on the loan, the Bank would not have a permissible purpose for obtaining the credit bureau. It is recommended that the Consumer Lending Dept require that all parties on a loan application be made aware that a credit bureau will be obtained." I realize that this is only a recommendation, but this team believes because a compliance auditor wrote this, they need to act on this recommendation. Is there some litigation that suggests we need to do this? I simply can not find anything, anywhere that states we are required to verbally inform a co-app that we are going to pull a cbr. What am I missing here? Is this a business decision and if so, based on what? If its written somewhere, I would like to see it. What are other institutions doing?
07/01/2002
No matter how you count or measure compliance risk, Truth in Lending has led the list for decades. The number of errors that translate into violations is always high.
06/24/2002
06/17/2002
Is a bank allowed to run a credit report on a customer whose only relationship with the bank is an existing checking account? The account has been open for 5 years and been in good standing.
06/09/2002
By Howard A. Lax, Esq.
Lipson, Neilson, Cole, Seltzer & Garin, P.C.
Troy, MI
05/20/2002
Customer's commitment expired. When we extended the commitment, we ran a new credit report. However, the fee for the extra report was never disclosed on our original disclosures. Should we have redisclosed when a new commitment was issued because of the extra fee?
05/06/2002
My bank charges an application fee for closedend home equity loans, which covers all closing costs, including credit report, flood determination, title search, appraisal, and mortgage recording fees. Currently we disclose each of these thirdparty fees as P.O.C. and the applicable amount on the GFE and HUD1A. Another local bank uses a similar method of one fee to cover all closing costs. However, they only disclose the one fee on the GFE and HUD1A, with no references to fees paid to thirdparty service providers. Needless to say, our loan operations would prefer to follow this local bank's example. I believe we should continue our current practice, but I'm having some trouble finding clear regulatory wording to support my opinion. Section 3500.7(a)(2) refers to "no cost" loans, but our loans do have an application fee. Could I have your opinion on how our situation should be disclosed and also a regulatory reference to back that up?
04/01/2002
At the recent Florida Deposit Account Administration seminar, we were told that we must get written permission from a business before obtaining a consumer report from ChexSystem's etc. The question is, must we get written permission to run the report on the business signers, or on the business itself or both?
03/04/2002
If a bank requires an upfront deposit on a mortgage loan application for appraisal and credit report fee costs, is this considered an application fee that must be charged to all applicants even if the application is declined prior to incurring the charges? Reg Z seems contradictory on this issue since appraisal and credit report fees are generally not to be considered finance charges in a real estate transaction.