ABA Banking Journal - May 2012 - (Page 41)

ABA COMPLIANCE CENTER | InbOx Can a referring advisor gather monitoring data? Q. If a bank works with financial advisors who refer mortgage customers to the bank, is it acceptable for the financial advisors to ask the government monitoring questions and then relay that information to the bank? Or this is something that bank must ask the customer directly? A. It depends. Generally the entity taking the application must request the information, be it on a printed application/separate form or verbally, if taken over the phone. If the financial advisor is not taking the application, then it may not be prudent to have the advisor request this information from the client. (This is especially so if they have not been trained.). However, if your question is really related to asking the financial advisor for the information (i.e., to note the applicant’s information) then this would generally not be permitted except perhaps if to help complete the information based on visual observation or surname. Two regulations address your questions. First, Regulation B, Section .13, requires the collection of monitoring information on applications for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence and secured by the dwelling. Section .13(b) states: “Questions regarding ethnicity, race, sex, marital status, and age may be listed, at the creditor’s option, on the application form or on a separate form that refers to the application. The applicant(s) shall be asked but not required to supply the requested information. If the applicant(s) chooses not to provide the information or any part of it, that fact shall be noted on the form. The creditor shall then also note on the form, to the extent possible, the ethnicity, race, and sex of the applicant(s) on the basis of visual observation or surname.” However, as indicated in the Commentary to 5(a)(2)-2 Regulation C generally requires creditors covered by the Home Mortgage Disclosure Act (HMDA) to collect and report information about the race, ethnicity, and sex of applicants for homeimprovement loans and home-purchase loans, including some types of loans not covered by Sect. 1002.13. As such, HMDA-reporting institutions would also follow the instructions for data collection on ethnicity, race, and sex found in Appendix B of Regulation C. It follows the same general premise as Regulation B in that the applicant must be asked, but not required, to provide this information. (Response provided February 2012) This special program could create fair-lending trouble Q. We are considering a new mortgage loan program with a favorable interest rate that will be offered only to new (not existing) mortgage and/or equity loan and line borrowers. Could this raise any fair-lending concerns? What if we were to, on occasion, make an exception to this restriction and offer this program to a current borrower? A. Your proposed program does raise some concerns, but it may not by itself be discriminatory. You should consider the impact of this decision on current customers who would qualify for the product but would be told they can’t apply. You could run afoul of the prohibition on not treating similarly situated applicants similarly. Secondly, you should consider whether the creditworthiness criteria established for the product are different than current products. Ask yourself if this change is logical and not potentially a problem based on the demographics of your current borrower population and the demographics of who you might be trying to reach. Lastly: Sure, you can make exceptions, but you should ask, if we make an exception, why would we not make exceptions for all similarly qualified applicants? This type of discretion can lead to potential discrimination issues if it is not applied consistently to all qualified applicants. (Response provided February 2012) Prompt payment crediting when payment’s via website Q. Please explain the meaning of Reg Z, Sect. 226.10, regarding prompt crediting of payments initiated on a bank’s website: “Payment made via the creditor’s website is received on the date on which the consumer authorizes the creditor to effect the payment, even if the consumer gives the instruction authorizing that payment in advance of the date on which the creditor is authorized to effect the payment. If the consumer authorizes the creditor to effect the payment immediately, but the consumer’s instruction is received after 5 p.m. or any later cut-off time specified by the creditor, the date on which the consumer authorizes the creditor to effect the payment is deemed to be the next business day.” Does this mean that if a consumer effects a payment on our bank’s website today (say Friday, Dec. 16) authorizing the transfer to occur on Tuesday, Dec. 20, the bank has to credit the payment as of Dec. 16 even though it did not receive funds until Dec. 20? A. No. What’s key is “the date on which the consumer authorizes the creditor to effect the payment,” rather than the date on which the instruction is given. For example, if your bank’s online banking system allows the customer to schedule a InbOx cONtINUes ON p. 42 may 2012 | ABA BANKING JOURNAL | 41

Table of Contents for the Digital Edition of ABA Banking Journal - May 2012

ABA Banking Journal - May 2012
Contents
Chairman's View
Editor's Column
The Economy
Bank Notes
Picture This
ABA Community Banking
Pass the Aspirin
Tech Topics
ABA Resources
Compliance Inbox
First Person

ABA Banking Journal - May 2012

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