Are Internet Applications Like Mail Applications

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Question:

I've seen several opinions on this, and I'm hoping you can clarify it for me. It is my understanding based on reading Official Staff Commentary to REG B and REG C , that loan apps taken over the Internet are treated as mail applications. That is also the answer I got in response when posing the question on BOL. However, I've now been told that the usual exceptions for delayed disclosure do not apply to Internet applications. I'm confused, any wisdom you can provide would be appreciated.

Answer:

"Loan apps taken over the Internet" are subject to several rules which (predictably) have varying requirements for timing and format. Generally, online submission and processing of consumer credit applications follow the familiar rules for face-to-face or mail applications.

Noteable exceptions, however, are the rules for booklets and program disclosures for ARM loans [226.19(b)] and HELOCS [226.5b(d)]. The Reg. Z OSC requires immediate delivery of these time-of-application disclosures. The exception for telephone applications does not apply and you do not get an additional three days to deliver these items. This exception applies only to the pre-application disclosures noted and does not apply to post-application disclosures.

First published on BankersOnline.com 12/6/04