Reg B - Which Form Do We Use?

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Question:

I have a question concerning Reg B and closed-end Home Equity Loans. We currently use Fannie Mae Form 1003 for all real estate related loans. In doing so are we violating Reg B with GMI on our home equity and construction loan on 1-4 family dwellings? My understanding is that the 1003 is a suggested form to use under Reg B because it gives that disclosure to the borrower about the use of the information. What is your opinion?

Answer:

If you are using the FNMA 1003 application form for all real estate secured applications, you are over-collecting GMI in many cases, which is a violation. You should refer to Section 202.5(d)(3) and 202.5(d)(5) of Reg B as well as Section 202.13(a). Also, Appendix B of Reg B provides information on collecting GMI. If a FNMA 1003 application is used for "non-applicable loans" (where the GMI should not be collected), Appendix B indicates the creditor should delete, strike or modify the data collection section on the form used.

First published on BankersOnline.com 2/04/08