With all that said...what do you recommend we do about the 1003? We are examined by the FDIC. My thoughts are to be safe and have the intention form completed along with the 1003. Of course, nobody in the lending department here is happy about another form to be signed. (Paperwork Reduction Act???)

Thank you for posting the ABA's memo. I assume that the 3rd bullet ("Intent to apply jointly must be evidenced at the time of application and should be documented in some fashion...")indicates that if the applicants complete an application form that has separate labeled sections and signature lines for both the "applicant" and "co-applicant", then intent to apply jointly would be satisfactorily evidenced. In other words, we shouldn't have to revise our forms (using this example) to include special "intent" language, because intent is implied, right??

I posted this information already, but probably in a different thread. A lead examiner at the FDIC in San Francisco said that signatures below a paragraph attesting to the correctness of the information would not be sufficient. He stated that "intent" had to be documented for joint applicants.

I modified my forms to match the model forms. The lead examiner said that if I do this - I have a SAFE HARBOR.

Like many of you, I am fed up with this whole thing. I am going to follow the FDICs advice and sleep tonight.

Dolly,

But that's the problem - a "lead" examiner is not allowed to interpret the law and should not be making the call on what is acceptable or not. He is in affect writing new regulations - which is dead wrong. You should not feel that you have to modify bank polily to meet the whims of your specific examiner.

You have to develop a policy within your organization that complies with the intent of the law and regulation and then they have to prove that your method doesn't comply. They can't make this up as they go. If you determine that your policy is that intent of an applicant is determined by the applicant completing and signing the application form - then how can they tell you no?? Only the applicant can challenge that in court - it is really not up to the regulators to make that call.

There has been no change in the regulation - so how can a "lead" examiner suddenly say that a "new form" is required??? Have you been in violation of Reg B all this time??? These guys need to chill.

The SAFE HARBOR aside, my point is that they had to consciously complete the information in the "co-applicant" section of the application, and consciously sign the "co-applicant" signature line of the application. Even if the attestation above the signature line only addresses accuracy and "correctness", it seems to me that the co-applicant's intent to apply jointly is evidenced by the fact that they decided to fill out and sign a credit application in the first place.

I believe this is the point David Dickinson has been trying to make all along, and the ABA memo supports it.

Quote:

---

they have to prove that your method doesn't comply.

---

Sorry, Randy. You're speaking from a higher plain. We only take interpretation issues so far and then we figure out a way to do what they say. Banging your head against the wall only gives you a headache. Our profit motive says you don't waste money fighting city hall.

The lead examiner told me that he showed my forms to their attorneys. I had added "My signature below is evidence of my intent to apply for a loan" above the Applicant and Co-Applicant signature lines on my forms.

This was his response:

"I reviewed your attached forms and your proposed wording above the signature line. Both the FDIC and the FED share the opinion that two signatures at the bottom of a uniform residential loan application, or any other application THAT HAS NOT BEEN MODIFIED TO SPECIFICALLY DOCUMENT AN INTENTION TO BE JOINT APPLICANTS, will not be considered documentation of an intention to be joint applicants. At this point you have several options, you can use your current application and have both applicants initial the joint applicant with spouse box at the top of the application to show intent, or you can use a separate form and have both applicants sign it for each application you treat as a joint application. Having a separate form for joint applicants to show intent should address your concern of intent being overlooked by applicants."

I changed my forms, as he said the application had to be MODIFIED TO SPECIFICALLY DOCUMENT AN INTENTION TO BE JOINT APPLICANTS. I think that is the safest thing to do. If the agencies issue guidance later that is different, I can always change my forms. Easy for me to do as they are Adobe Acrobat forms posted on our Intranet.

Here's an update I got from Nessa Feddis (attorney with the ABA). I asked her for permission to use her memo at the ABA Conference. Here is her response:

Please do. Also, you can add that we had discussions with Tim Berniston at the FDIC who also agrees with our position. His only point was that if a bank has had some "issues" e.g complaints, it might be vulnerable if it only relies on the 1003 without additional language. That, I believe, would be the unusual case. You can also remind them that the Freddie Mac form still is in the model form appendix — unchanged. Accordingly, it has safe harbor.