Do we have to have a paper loan application in the file? What if we take a phone or online application? Does an actual paper loan application have to be signed and dated by the borrower?
First off, Regulation B does not require written applications as a general rule. But obviously, you want to document who said what, because we are talking about fair lending here, so you want to make sure that you can demonstrate that this is what they told you. It’s also a federal crime to falsify information to a loan officer. So, it’s best to have things in writing from the applicant and that you have them sign it. But that’s not a regulatory requirement. Again, Reg B says you don’t have to have written applications.
Now, there’s one exception to that. Reg B does say when it comes to home loans that are for the purchase or refinance of a principal dwelling, you have to have a written application. But that’s not a burden placed on the applicant, but rather on the loan officer. So, at a minimum, when it comes to these home loans (purchase/refinance of the principal dwelling), loan officers should be writing down who said what, regardless of whether it’s a phone or online application, etc.
Prudency says we always want to have written applications from our applicants because we want them to put in writing, in their own handwriting, hopefully, an attestation that this is what they said, not what you assume they said or may have misunderstood.
That’s exactly the kind of thing we’re going to be talking about on February 5th at our upcoming webinar called Applicants and Applications.
That’s the applications portion. Let me talk about applicants a little bit. Who can you make sign? What can you make them sign? That’s the kind of thing we’ll discuss when it comes to applicants. So, for two hours, we’re going to get into the weeds in this complicated area and run through all sorts of scenarios. Join me on February 5th. We’ll see you then.
David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.
He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transform the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM), and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.
David and his wife Karen have 3 adult children and 2 grandsons (none of whom live at home!) and 3 cats (of which Dave is allergic … the cats, not the children!). They live on a lake in Nebraska and when possible he can be found fishing or making sawdust in his shop. David plays the guitar & piano and enjoys singing with Karen. They occasionally lead worship at their church.