Is it necessary to have an applicant or applicants sign a paper application at origination for a non realestate consumer loan?

A person could apply for credit orally, but the application usually has more than a request for credit. It generally contains a place to express joint intent to borrow, an authorization to verify credit and employment, an attestation that the information is true, and an application date so you have documentation of date applied for the purpose of notice of action taken. Because of all that, most loan policies require a written and signed application.

If the resulting application that is produced, printed and signed at closing with the other closing docs contains all this information, do we need it up front? Seems inefficient to fill out a paper app and then input into the system.

They serve 2 different purposes. The first is the information the applicant gave the lender. They are attesting it is true and correct. This is the statement the customer provides, and authority for the creditor to proceed. Some banks have eliminated it for electronic applications but something is needed to prove the applicant requested credit, joint intent, etc.

The latter is information the creditor certified/validated during the loan process. They usually somewhat resemble each other. That is what the underwriter approved from the information.

Would it be fair to say that different banks are doing this differently? I have worked for 4 banks in the mid west and for non real estate consumer loans, there was no up front paper app to fill out and sign. This would mean they were out of compliance. Not saying they were or were not. Everything was signed at closing. Isn't the fact that they are applying for a loan giving the lender the go ahead to pull credit and proceed?

If this is absolutely needed up front, attestation and authority to proceed, could this be a form to sign with the language, i.e. Date, I attest, app # (that is auto generated), joint intent...instead of a full blown application and then the moving of the information into the loan origination system?

" Isn't the fact that they are applying for a loan giving the lender the go ahead to pull credit and proceed?"

Yes. Banks do things differently. Electronic applications give the bank the authority to pull credit reports. There should be "something" that indicates the applicant requested credit, whether it be electronic, a loan officer's notes or application. .

At my former bank....big bank, we took countless applications by phone, pulled credit, etc....if declined, we never saw the applicant, never had anything signed. It's not necessarily a compliance issue (you asked if the banks were "out of compliance.") Documentation is the key as to when events occur and disclosures are provided. There is simply no mandate for signatures on an application or joint intent (which can also be verified by phone and documented), from a compliance standpoint. You still have to demonstrate compliance, such as for joint intent, but it doesn't have to be in the form of a signature on a piece of paper.

Anon: You've received some good advise. Here's our training outline on this topic.

Regulation B requires that institutions maintain files documenting written applications for mortgages on dwellings occupied as a primary residence. Regulation B states , “A creditor shall take written applications for the dwelling related types of credit covered by §1002.13(a). [§1002.4(c)]

A. Credit Requests Requiring a Written Application [§1002.13(a)(1)]:
“. . . primarily for the purchase or refinancing [of the purchase] 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 ..”

B. Completing the Application:
1. Lender or Applicant:
Regulation B does not, however, require that the applicant complete a written application (but this may be prudent). Rather, the responsibility rests with the lender. Even if the applicant does not fill out a written application, the lender can complete an application on behalf of the applicant to comply with Regulation B.

2. Model Application Forms:
Model application forms are provided in Appendix B to the regulation, although use of a printed form of any kind is not required. A creditor will satisfy the requirement by writing down the information that it normally considers in making a credit decision. The creditor may complete the application on behalf of an applicant and need not require the applicant to sign the application. [Commentary to §1002.4(c) #1]

3. Telephone Applications:
A creditor that accepts applications by telephone for dwelling-related credit covered by §1002.13 (purchase or refinance of the borrower’s principle dwelling and secured by the dwelling) can meet the requirements for written applications by writing down pertinent information that is provided by the applicant(s). [Commentary to §1002.4(c) #2]

4. Declined Oral Applications:
Thus, lenders who have declined oral applications (including prequalifications) must create an “application” to comply with Regulation B.

Thank you. Great information

I beg to differ, if you do not have a signed application that expressly gives you consent to pull my credit before you actually pull my credit I guarantee you I would have standing to file a successful federal lawsuit under the FCRA and I would win under 1681 for unauthorized credit pulls.

Beg to differ with whom? Before picking an argument with people that know the regulations and have been in banking compliance for years, the least you could do is provide actual citations to support your disagreement. If you do feel strongly that you are correct, feel free to waste your money on attorneys for the court to say you are wrong.

For example:

Sec. 604. Permissible purposes of consumer reports
(a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

(1) In response to the order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.

(2) In accordance with the written instructions of the consumer to whom it relates.

(3) To a person which it has reason to believe

(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer, or

There is no mention of having to have a signature from the applicant in 604(3)(A). Section 604 is a direct copy of 15 U.S. Code § 1681b

. . . . . and begging to differ with a post 9 years old!

wow, didn't even notice that. guess some people really have too much time on their hands...