There has long been discussions on whether or not we need to or are required to have a handwritten application or if just having a typed one or computer generated from software one is sufficient. Does anyone know of a reg refernece or has had a seminar or examiner give direction.
I do know that you usually need both for a secondary market loan??? please help?

The advantage of the computer generated application signed at closing is that YOU populated the fields with "accurate" data. That is, the liabilities exactly match the credit report because you input the data from the credit report. The income exactly matches the paystub in file, etc.

In this day of internet applications, there might not be a handwritten application. Since we do many internet applications, we have many secondary market loans without both applications.

If you will refer to §202.5(e)of Reg B and then look at the commentary, you should find the answer to your question.

Quoting from the Reg B commentary, "Information entered directly into and retained by a computerized system qualifies as a written application under this paragraph."

There are cross references to other sections in relation to applications for real estate, so I recommend you look at all sections.

I can't speak to the secondary market necessity, but by entering the data in your system for the initial application, you have a legible document and have all the data entered for populating your database record of the account. You'd have to enter it once anyway, why not make it the initial application. You can still get it signed which validates the data if the customer is present.

There is no law or regulation that requires a handwritten app. I'd see ADA problems there, limbs, sight, motor skills, etc.

From a regulatory perspective, Regulation B is the only one I know of that specifically requires a written application, and then only for specific loan types. For a citation as to whether this needs to be handwritten or computer generated, I'd refer you to Reg B Official Staff Commentary to section 202.5(e). Look specifically at comments #1 and 3 and that should give you what you need.

Now as to the requirements that FNMA and FHLMC or other investors might have for applications in secondary market mortgage files, that's a different matter that you'll need to address with specific investors, but it's not a compliance issue per se.

It is interesting to think about how advances in technology over the past 20 years are changing so many things that were taken for granted at the time most of the consumer protection regulations were first developed. Just think, when Regulation Z was first written the most advanced loan preparation document was the IBM electric typewriter and carbon paper.

As Al points out, many lenders are accepting applications over the Internet. Does a "written" application mean we need to print it out and save (or scan) a paper copy so that it can show the customer's signature obtained at closing? What will we do with widespread use of electronic signatures and biometrics when the time comes? (And it is coming.) I think we are fortunate to be bank compliance professionals at this, more than any other time since Truth-in-Lending was passed.

Sometimes the lenders get all the glory, but we Compliance Officers get the interesting stuff!

Tony: Do I detect a hint of sarcasm somewhere on your post? I'm fairly perceptive that way!

There's another term for "interesting stuff", but decorum prevents me from mentioning it here.

I thought the 'written application' was in contrast to an oral application. I never really considered that computer-generated, typewritten, etc. weren't within the regs (excluding secondary market consideration). Am I just missing the boat, or can someone tell us what the original purpose of all this was?

Ted,

My post was absolutely serious. I honestly think the Compliance Officer has the best and most interesting job in the bank (with proper support from executive management, of course). Without proper support, we have the worst job in the bank.

lgover: I agree with your thoughts. That's how I interpret the regulation.

I think this post originally started out with a question as to whether the application needed to be completed "by hand" or if a computer generated or typewriter prepared paper copy was OK. The discussion kind of took a little twist from there.

As mentioned before, FannieMae and FreddieMac require both to be in the loan file.

I require the customer's original, handwritten application to be retained in our credit files. This is required because the computer puts it's own date on the application that does not happen to be the date the customer applied. If both are not kept,you find that you have psychic loan officers who have gathered all of this info before they received the app or gave the disclosures. If they do both, both should be in file. I would prefer that they take the app via the computer, but that does not always fit in with the customer's schedule.

I have always liked hand written applications from a false statement perspective. If your typed application contains an error, the applicant will say "I didn't say that. You must have misunderstood me." If I have a hand written application, I can always go back to it and know exactly what the borrower reported. I think it is a good idea to type the info from the hand written source, but you should retain the original, hand written application.