COMMERCIAL CHECKLIST
Total Training Solutions
COMMERCIAL CHECKLIST
➢ CHECKLIST
➢ EXPLANATORY MATERIAL
Anne Lolley
877-778-5192 x4 (toll-free)
alolley@
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| |COMMERCIAL LOAN |
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| |BUSINESS AND AGRICULTURE |
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| |─ BUSINESS AND AGRICULTURE ─ |
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| |USE THIS CHECKLIST IF LOAN PROCEEDS WILL BE USED FOR BUSINESS OR AGRICULTURAL PURPOSES. |
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| |LOOK AT PURPOSE OF LOAN . . . COLLATERAL IS IRRELEVANT. |
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|NEVER APPLICABLE |APPLICABLE AS USUAL |HMDA WILL APPLY IN ANY OF THE FOLLOWING SITUATIONS: 4 |
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|RESPA | |Loan is to purchase a dwelling and is secured by a dwelling; |
|Integrated Disclosures |No Discrimination | |
|ARM Disclosures |Joint-Credit Statement |Loan is to improve a dwelling and is either (i) secured by a dwelling or (ii) classified |
|Right of Rescission |Adverse Action Notices |as a home improvement loan; or |
|HOEPA / HPML |ECOA Copy-of-Appraisal Rules | |
|Waiting Periods |Flood Insurance |Loan is a refinancing (any purpose) and both old/new loan is secured by a dwelling. |
|Federal Insurance Disclosures |Appraisals and Evaluations | |
|Risk-Based Pricing Disclosures |Environmental Rules | |
|Privacy Notice |HMDA |DOES HMDA APPLY? Yes No |
|Non-HMDA Monitoring |Article 9 Collateral Rules | |
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| | |NOTE: HMDA will not apply to a loan to purchase farm property, even if there is a |
| | |dwelling on that property. |
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|APPLICANT |APPLICATION DATE |LOAN TYPE |BORROWING ENTITY |
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|_________________________________________ | |New loan |Sole Proprietorship |
| | |Refinancing |Individuals Acting Jointly |
| | | |General Partnership |
|_________________________________________ | | |Limited Liability Company (LLC) |
| | | |Corporation |
|LOAN NO. | | |Limited Partnership |
| | | |Limited Liability Partnership |
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| | |Secured by dwelling | |
| | |First lien | |
| | |Junior lien | |
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|DURING APPLICATION PROCESS |
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|_____ Determine if application is joint. If so, document that fact. |
|2 |
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|_____ If existing customer, resolve existing exceptions. |
|3 |
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|_____ If HMDA and applicant is a natural person, get monitoring data. |
|4 |
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|_____ Obtain authorization to get information. |
|5 |
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|_____ If loan will purchase real estate, get copy of purchase contract. |
|6 |
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|If loan secured by already-owned real estate, get copies of: |
|7 |
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|_____ Deed _____ Title work _____ Appraisal _____ Existing mortgage |
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|_____ If loan secured by real estate, order a survey. |
|8 |
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|_____ If loan is secured by real estate, obtain title insurance. |
|22 |
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|_____ If zoning will affect business, determine if appropriate. |
|9 |
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|_____ If secured by first lien on a dwelling, provide the ECOA |
|10 |
|copy-of-appraisal notice within 3 business days after application. |
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|_____ If applicant/owner is a trust, obtain (i) trust copy/certification. |
|11 |
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|_____ Check for lending limit and Reg O problems. |
|12 |
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|CIP – NEW CUSTOMERS ONLY |
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|_____ Obtain customer information before making the loan. |
|13 |
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|_____ Verify customer identity within reasonable time. |
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|ENVIRONMENTAL RISK ANALYSIS – IF REAL PROPERTY 14 |
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|Past and present uses of the property: |
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|Government agency contacts? |
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|Other relevant information? |
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|ENTITY DOCUMENTATION 15 |
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|CORPORATION |
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|_____ Articles of Incorporation ____ Bylaws |
|_____ Corporate Resolution ____ Certificate of Good Standing|
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|LIMITED LIABILITY COMPANY (LLC) |
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|_____ Articles of Organization ____ Operating Agreement |
|_____ Resolution ____ Certificate of |
|Good Standing |
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|GENERAL PARTNERSHIP |
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|_____ Partnership Agreement ____ Resolution |
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|LIMITED LIABILITY PARTNERSHIP |
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|_____ Statement of Qualification ____ Partnership Agreement |
|_____ Resolution ____ Certificate of |
|Good Standing |
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|SOLE PROPRIETORSHIP |
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|____ Identification of sole proprietor ____ Tax returns |
|____ Other financial data |
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|FINANCIAL INFORMATION 16 |
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|____ Financial statements ____ Tax returns ____ Other |
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|GUARANTORS 17 |
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|_____ If new customer, identify (CIP procedures would work) |
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|_____ If non-individual, obtain entity documentation. |
|_____ If non-individual, check on authorization to guarantee the loan. |
|_____ Obtain financial information showing ability to repay. |
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|APPRAISAL/EVALUATION - IF REAL PROPERTY 18 |
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|_____ Order new appraisal |
|_____ Conduct new evaluation (can use county tax data as basis) SELECT ONE|
|_____ Use existing appraisal or evaluation (must verify validity) |
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|_____ Review appraisal or evaluation |
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|COPY OF VALUATION 19 |
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|_____ If first lien on a dwelling, provide copy of appraisal or evaluation |
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|( Must be received at least 3 business days before closing |
|( If waiver, provide by closing |
|( Remember mailbox rule (allow 3 business days for delivery) |
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|ADVERSE ACTION (IF APPLICABLE) 20 |
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|_____ SMALL BUSINESS – Notice of Adverse Action within 30 days |
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|_____ BIG BUSINESS - Notify within reasonable time |
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|FLOOD INSURANCE – IF SECURED BY BUILDING 21 |
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|____ Obtain flood hazard determination (or recertification) |
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|____ If SFHA, provide Notice 10 days before closing (get acknowledgement) |
|____ If SFHA and participating community, require insurance (before closing) |
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|KEY MAN INSURANCE 23 |
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|_____ If an individual is indispensible, consider key man insurance |
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|LOAN-TO-VALUE LIMITS 24 |
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|_____ Ensure that the bank complies with the loan-to-value limits |
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|MORTGAGE 25 |
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|_____ Obtain completed mortgage (or deed of trust). |
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|_____ If real estate has improvements, verify insurance coverage. |
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|OBTAIN SECURITY INTEREST 26 |
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|_____ LIFE INSURANCE - Assignment of Life Insurance |
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|_____ CERTIFICATE OF DEPOSIT OR DEPOSIT ACCOUNT - Assignment |
|_____ INVESTMENT PROPERTY (STOCKS, BONDS) – Assignment |
|_____ OTHER COLLATERAL - Commercial Security Agreement |
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|PERFECT SECURITY INTEREST 27 |
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|____ List of potential buyers |
|FARM PRODUCTS ____ Pre-notification to buyers |
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|____ UCC-1 filed centrally |
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|TITLED VEHICLES ____ Note lien on title |
|FIXTURES ____ UCC-1 filed locally |
|CERTIFICATE OF DEPOSIT ____ Possession |
|BEARER STOCK CERTIFICATE ____ Possession |
|REGIST STOCK CERTIFICATE ____ Possession + Endorse/Re-registration |
|UNCERTIFICATED SECURITY ____ Written agreement |
|MOST OTHER COLLATERAL ____ UCC-1 filed centrally |
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|ADDITIONAL STEPS TO PROTECT COLLATERAL 28 |
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|_____ If secured by equipment/vehicles, verify insurance coverage. |
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|_____ If collateral on leased property, obtain landlord’s lien waiver. |
|_____ If PMSI in inventory or livestock, notification to lienholder. |
|_____ If perfected by filing, UCC lien search to determine priority. |
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|PREPARE FOR CLOSING 29 |
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|_____ Promissory note / Guarantee |
|_____ Mortgage / Security Agreement |
|_____ Assignment of insurance / stock / deposit account / rents and leases |
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|_____ Landlord’s lien waiver |
|_____ List of potential buyers |
|_____ If HMDA applies, obtain LAR data |
|_____ Schedule closing date, time, signers |
|_____ If loan is secured by real estate, coordinate with closing agent |
|_____ Prepare and mail instruction letter to closing agent |
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|AT CLOSING 30 |
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|_____ Ensure that documents are signed, dated and initialed |
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|_____ Collect any funds due from borrower |
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|AFTER CLOSING 31 |
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|Record or file the following documents, as appropriate: |
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|_____ Mortgage or deed of trust (must be notarized) |
|_____ Assignment of leases and rents |
|_____ UCC financing statement |
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|_____ Conduct a UCC lien search to verify bank’s filing |
|_____ Review documents; organize/assemble files; book loan |
|_____ Document and record exceptions |
|_____ Verify accuracy of “uploaded” information |
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|DON’T FORGET 32 |
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|SCRA PROTECTIONS APPLY TO BUSINESS AND AGRICULTURAL LOANS. |
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|NOTES AND INSTRUCTIONS |
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|1 |THE REQUIREMENT ORIGINALLY DESIGNATED AS BLOCK 1 (FOR KANSAS BANKS) IS NOT GENERALLY APPLICABLE IN OTHER STATES AND HAS BEEN |
| |REMOVED FROM THIS BOOKLET. |
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|2 |The Equal Credit Opportunity Act (Reg B) applies to all loans, including commercial loans. Under the ECOA, applicants must |
| |indicate—at the time of application—whether they are applying for joint credit. This requirement is found in the Regulation B|
|JOINT CREDIT STATEMENT |Commentary and states as follows: |
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| |Evidence of joint application. A person's intent to be a joint applicant must be evidenced at the time of application. |
| |Signatures on a promissory note may not be used to show intent to apply for joint credit. On the other hand, signatures or |
| |initials on a credit application affirming applicants' intent to apply for joint credit may be used to establish intent to |
| |apply for joint credit. |
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| |This disclosure is typically found on the application form. If the bank’s business application does not contain this |
| |statement, a separate form will be required. |
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| |NOTE: When several individual applicants apply for a business loan, the bank must determine whether the individuals have |
| |formed a partnership. If so, the application is being made by a single partnership—it will not be a joint application. |
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|3 |If an applicant has existing loans with the bank, review those existing loans to determine if there are exceptions that need |
| |to be cleaned up before the bank can act on the application. |
|RESOLVE EXCEPTIONS | |
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|4 |A bank is subject to the Home Mortgage Disclosure Act (HMDA) if it (i) has assets in excess of $44 million and (ii) has a home|
| |or branch office in a metropolitan area. [$44 million is the threshold for 2016; it changes annually.] |
|HMDA | |
|MONITORING |If a loan is subject to monitoring requirements and the applicant is a natural person (a sole proprietor), the lender must |
|AND |document the applicant’s ethnicity, race and sex. If the applicant is not a natural person (partnership, corporation), no |
|REPORTING |HMDA monitoring is required. |
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| |If monitoring data must be collected (because the applicant is a natural person), the lender must inform the applicant: |
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| |That the federal government requires the information in order to monitor compliance with federal discrimination laws; and |
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| |For in-person applications, that if the applicant does not provide the data, the lender is required to note the data on the |
| |basis of visual observation or surname. |
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| |Some business applications do not contain a monitoring block for this data. If that is the case, use a separate form to |
| |collect the information. A sample form is printed on PAGE 15. |
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| |Proposed Changes: In October of 2015, the CFPB revised the HMDA reporting rules. Most of the new rules, however, will not |
| |become effective until January 1, 2018. The new reporting requirements are briefly discussed on PAGE 23. |
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|5 |Obtain the applicant’s written authorization to obtain information from third parties. |
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|AUTHORIZATION | |
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|6 |If the loan proceeds will be used to purchase real estate, obtain a copy of purchase contract. |
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|PURCHASE CONTRACT | |
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|7 |If loan will be secured by real estate already owned by borrower, obtain copies of the deed, previous title work, previous |
| |appraisals, and any mortgages. |
|REAL ESTATE INFO | |
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|8 |If loan will be secured by real estate, order a survey. Indicate whether the bank wants (i) an “Improvement Land Certificate” |
| |(ILC) that shows the improvements or (ii) a “contract” that only shows the pins. |
|REAL ESTATE SURVEY | |
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|9 |If zoning will affect the business operation, investigate the zoning and determine whether it is appropriate for the |
| |property’s intended use. |
|ZONING | |
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|10 |The copy-of-appraisal requirement arises under the Equal Credit Opportunity Act (Reg B), which applies to all loans, including|
| |commercial loans. For years, if a loan was secured by a dwelling, the bank had to provide a copy of the appraisal/evaluation,|
|COPY-OF-APPRAISAL NOTICE |either (i) routinely or (ii) upon request (after providing a notice of the applicant’s right to receive a copy of the |
| |appraisal). |
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| |Because of the new CFPB rules, the copy-of-appraisal requirement has now changed. Beginning January 18, 2014, if a loan is |
| |secured by a first lien on a dwelling, the bank must provide the applicant with a notice of the applicant’s right to receive a|
| |copy of any valuation (appraisal or evaluation). This notice must be given within three business days after application. |
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|11 |If either the applicant or the owner of secured property is a trust, the lender should obtain either (i) a copy of the trust |
| |document or (ii) a completed-and-notarized Certification of Trust. If permitted in your state, the Certification is usually |
|CERTIFICATION |the easiest and best solution. |
|OF TRUST | |
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|12 |Make sure the loan will fall within the bank’s lending limit. |
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|LENDING LIMIT/REG O |If the applicant is an insider, be sure to check for possible Reg O problems. Reg O is complicated and detailed, but a simple|
| |summary—showing the basic rules—appears on PAGE 16. |
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|13 |Under the Bank Secrecy Act a bank must develop a Customer Identification Program (CIP). Your bank doubtless has such a |
| |program. If the applicant is an existing bank customer, someone will have already gathered the appropriate information. But |
|CUSTOMER IDENTIFICATION |if the applicant is a new customer, the lender must follow the bank’s customer identification program to identify the |
|(CIP) |applicant and verify that identity. At minimum, the bank’s program will require the following: |
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| |Identify the customer by obtaining the following information prior to closing: |
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| |Name, |
| |Date of birth, |
| |Address, and |
| |Social security number or employer identification number. |
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| |Verify the customer’s identity within a reasonable time after the loan is closed. |
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| |Verification requirements are typically as follows: |
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| |Sole proprietorship ( Driver’s license + Other (refer to bank’s CIP) |
| |Business entity ( Documentation shown in next section + Other (refer to bank’s CIP) |
| |Each individual signer ( Driver’s license + Other (refer to bank’s CIP) |
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|14 |When a loan is secured by real property, the bank must consider the risk of environmental liability and conduct a brief |
| |analysis of that risk. This checklist enables the lender to conduct a simple environment risk analysis by asking two simple |
|ENVIRONMENTAL RISK ANALYSIS |questions and documenting the responses right on the checklist. Usually the responses will not indicate a potential problem |
| |and the analysis will be complete. If the responses indicate an environment concern, the lender should turn to the bank’s |
| |environmental policy for additional guidance. |
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|15 |If the applicant is a business entity (sole proprietorship, corporation, partnership, LLC), obtain copies of documents showing: |
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|ENTITY DOCUMENTATION |That the entity is authorized to do business in your state, |
| |Whether the entity has the authority to borrow, |
| |Who has the authority to sign the loan documents on behalf of the entity, |
| |How many signatures will be required, and |
| |How the signer must sign. |
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| |CORPORATION |Articles of Incorporation |
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| | |Bylaws (along with any amendments) |
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| | |Corporate Resolution (showing who has authority to borrow and sign for the corporation) |
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| | |Certificate of Good Standing (for any state in which the entity does business) |
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| |LIMITED LIABILITY | |
| |COMPANY (LLC) |Articles of Organization |
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| | |Operating Agreement |
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| | |Resolution (showing who has authority to borrow and sign on behalf of the LLC) |
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| | |Certificate of Good Standing (for any state in which the entity does business) |
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| |GENERAL |General partnerships are not typically required to file with the state |
| |PARTNERSHIP | |
| | |Partnership Agreement (if written agreement exists) |
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| | |Resolution (showing who has authority to borrow and sign on behalf of the partnership) |
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| | |Certificates of Good Standing are NOT issued for general partnerships |
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| |LIMITED |Certificate of Limited Partnership |
| |PARTNERSHIP | |
| | |Partnership Agreement |
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| | |Resolution (who has authority to borrow and sign on behalf of the limited partnership) |
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| | |Certificate of Good Standing (for any state in which the entity does business) |
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| |LIMITED |Statement of Qualification |
| |LIABILITY | |
| |PARTNERSHIP |Partnership Agreement |
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| | |Resolution (who has authority to borrow and sign on behalf of the limited partnership) |
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| | |Certificate of Good Standing (for any state in which the entity does business) |
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| |SOLE |Personal identification of sole proprietor |
| |PROPRITORSHIP |Tax returns |
| | |Other financial data as required by bank’s loan policy or procedures |
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| |OBTAIN FINANCIAL INFORMATION SHOWING APPLICANT’S ABILITY TO REPAY THE LOAN. |
|16 |____________________________ |
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|FINANCIAL INFORMATION |IF THE BANK’S LOAN POLICY CONTAINS REQUIREMENTS FOR FINANCIAL INFORMATION, |
| |LENDERS MUST FOLLOW THOSE REQUIREMENTS. |
| |OTHERWISE, CONSIDER OBTAINING THE FINANCIAL INFORMATION INDICATED BELOW. |
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| | |Financial statements for the previous two fiscal years |
| |ESTABLISHED BUSINESSES |The most current interim financial statement |
| | |Tax returns for the previous two years |
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| |NEW |Financial statements of individual owners for previous three fiscal years |
| |BUSINESSES | |
| | |The most recent interim financial statement |
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| | |Tax returns of the individual owners for the previous three years |
| | | |
| | |Monthly interim statements (year-to-date) |
| |ADDITIONAL INFORMATION | |
| | |Balance sheet |
| |DEPENDING ON THE | |
| |SITUATION, THE ADDITIONAL |Income statement |
| |INFORMATION SHOWN | |
| |AT THE RIGHT MAY NEED |List of accounts receivable (aged) |
| |TO BE OBTAINED. | |
| | |List of accounts payable (aged) |
| | | |
| | |An accountant’s compilations, reviews, audits (if applicable), as well as consolidated and |
| | |consolidating statements |
| | | |
| | |If borrower is a new customer, a Dun and Bradstreet report |
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| |REPORTS AND |Feasibility studies (for development and construction projects) |
| |DOCUMENTS | |
| | |Copies of leases and subsequent rent rolls (when repayment will come from income–producing |
| |THESE ADDITIONAL |property |
| |REPORTS AND DOCUMENTS | |
| |MAY BE APPROPRIATE | |
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|17 | |
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|GUARANTORS | |
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| |REQUIREMENT |HOW IT APPLIES |
| | | |
| |EQUAL CREDIT OPPORTUNITY ACT |The Equal Credit Opportunity Act (Reg B) applies to all loans, including commercial loans. It |
| |(REG B) |permits the bank to require that directors, partners or officers guarantee the loan. The bank |
| | |cannot, however, automatically require the signatures of their spouses. |
| | | |
| |IDENTIFICATION |Pursuant to safety and soundness considerations, a prudent bank will determine and verify the |
| | |identity of any guarantor. The CIP rules do not technically apply to guarantors, but could be |
| | |used in the identification process. |
| | | |
| |ENTITY DOCUMENTATION |Obtain entity documentation (see “ENTITY DOCUMENTATION” on PAGE 6 for suggested documentation). |
| | | |
| |ENTITY |If the guarantor is a non-individual entity (corporation, partnership, LLC), use a resolution form|
| |RESOLUTION |that specifically authorizes the entity to guarantee the loan (commonly-used resolution forms may |
| | |not contain this authorization). |
| | | |
| |FINANCIAL INFORMATION |Obtain financial information showing guarantor’s ability to repay the loan. See “FINANCIAL |
| | |INFORMATION” on PAGE 7 for suggested documentation. |
| | |
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|18 |If a loan is secured by real property, the value of the secured property must be determined in one of the following ways: |
| | |
|APPRAISALS |A new appraisal; |
|AND |A new evaluation; or |
|EVALUATIONS |An existing appraisal/evaluation. |
| | |
| |Note: No appraisal/evaluation is required when the mortgage is taken only as an abundance of caution. |
| | |
| |Appraisals. If a loan is secured by real property and the amount of the loan exceeds $250,000, the bank must hire certified |
| |appraiser to conduct an appraisal of the real property securing the loan. Note, however, there are certain exceptions for (i) |
| |Certain business loans, (ii) same-lender refinancings with no new money and (iii) same-lender refinancings with no material |
| |change in the market or property. In these cases, an in-house evaluation may be permitted. |
| | |
| |Evaluations. If a loan is secured a real property and the amount of the loan is $250,000 or less, the bank can value the |
| |property by conducting an in-house evaluation. An in-house evaluation can be based on a county tax assessment, but the bank |
| |must (i) review the assessment, (ii) determine whether the assessment is valid and (iii) prepare a written review that includes |
| |a reconciliation of the value. |
| | |
| |Business Loans of $1 Million or Less. If repayment for this type of loan is not dependent on (i) the sale of the real estate |
| |or (ii) rental income from the real estate, the bank can satisfy the appraisal requirement by conducting an in-house evaluation.|
| | |
| |Existing Valuations. If the bank has an existing appraisal or evaluation, it can use that existing valuation to support a new |
| |loan—but only if it documents that the existing appraisal or evaluation is still valid. |
| | |
| |Reviewing Appraisals and Evaluations. As part of a bank’s credit approval process—and prior to the final credit decision—the |
| |bank should review appraisals and evaluations to ensure that they comply with the federal appraisal regulations and the bank’s |
| |internal policies. |
| | |
| |Note that both appraisals and evaluations must be conducted before the loan is closed. |
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|19 |Under the Equal Credit Opportunity Act, which applies to all loans (including commercial loans), the bank must provide the |
| |consumer with a copy of any valuation (appraisal or evaluation) developed in connection with an application for a loan secured |
|PROVIDING |by a first lien on a dwelling. The copy must be provided promptly upon completion of the valuation and must be received by |
|COPIES OF APPRAISALS |the consumer at least three business days before closing. If the copy is provided by mail or e-mail, the "mailbox rule" |
| |applies: The consumer will not legally receive the copy until three business days after mailing or e-mailing. The bank may, |
| |however, use evidence to show that the copy was received earlier. The bank cannot charge a fee for the copy, but can charge the|
| |applicant a reasonable fee to reimburse for the bank for the cost of preparing or obtaining the valuation. |
| | |
| |The applicant can waive the three-days-before-closing timing requirement (either orally or in writing), but even if it receives |
| |a waiver, the bank must provide the copy at or prior to closing. And note that the bank must receive the waiver at least three |
| |business days before closing. If the loan is not closed and the applicant has provided a waiver, the bank must provide the copy |
| |within 30 days. |
| | |
| |Here is the required notice wording: |
| | |
| |We may order an appraisal to determine the property’s value and charge you for this appraisal. We will promptly give you a copy |
| |of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost. |
| | |
| |Finally, note that this requirement applies regardless of whether credit is extended or denied, or the application is incomplete|
| |or withdrawn. In addition, the new law makes it clear that the copies may be provided in electronic form, as long as the bank |
| |complies with the federal E-Sign Act. |
| | |
|20 |The Equal Credit Opportunity Act, which applies to all loans (including commercial loans), requires the bank to provide the |
| |applicant with a Notice of Adverse Action. The rules are detailed and rather complicated: |
|ADVERSE ACTION | |
| |Completed Application. If the bank denies a completed application (refuses to grant credit in the amount or terms requested), |
| |the bank must provide a Notice of Adverse Action within 30 days after receiving the application. |
| | |
| |Completed Application. If the bank makes a counteroffer and the applicant accepts the counteroffer, there is no adverse action |
| |and no notice is required. But if the applicant does not accept the counteroffer, the bank must provide a Notice of Adverse |
| |Action within 90 days after notifying the applicant of the counteroffer. |
| | |
| |Incomplete Application. Within 30 days after receiving an incomplete application, the bank must take one of the following |
| |actions: |
| | |
| |Deny the incomplete application and provide a Notice of Adverse Action within 30 days after taking the adverse action; or |
| | |
| |Provide a Notice of Incompleteness. This wording is incorporated into the usual Notice-of- Adverse-Action form. If the |
| |applicant fails to respond, the bank has no further obligation. But if the applicant supplies the information, the bank must |
| |take action on the application and follow the usual notification rules. |
| | |
| |Withdrawn Application. If an applicant specifically withdraws an application, there is no “adverse action” and a Notice of |
| |Adverse Action is not required. If the applicant provides the bank with a letter of withdrawal, that letter should be kept in |
| |the file. If there is no letter, the lender should document the withdrawal. Consider using the “NOTES AND INSTRUCTIONS” |
| |portion of the checklist to make this note . . . and the lender should initial and date the notation. |
| | |
| |The rules summarized above are applicable to all non-business applications and can also be used for small business applications.|
| |A “small business” is a business with gross annual revenues of $1 million or less. |
| | |
| |Note, however, that there are special rules for “big businesses”—businesses with gross annual revenues of more than $1 million. |
| |In this case, the ECOA requires the bank to notify the applicant within a reasonable time. Notice may be formal or informal, |
| |oral or written. A telephone call is okay, but must be documented. The bank is only required to provide a written statement of|
| |the reasons of the adverse action if the applicant requests those reasons in writing within 60 days after getting the notice of |
| |adverse action. |
| | |
| | |
| | |
| | |
| | |
|21 |The bank must initiate flood insurance procedures when it makes, increases, extends or renews a loan secured by a building or |
| |manufactured home. The checklist shows the key requirements: |
|FLOOD INSURANCE | |
| |Determine whether the building is in a Special Flood Hazard Area (SFHA). |
| | |
| |If the building is in a SFHA, provide the borrower with a notice. This notice must be provided at least 10 days before closing |
| |and must be acknowledged by the borrower. |
| | |
| |If the building is in a SFHA and the community participates in the National Flood Insurance Program, the bank must require flood|
| |insurance to be in place before closing. |
| | |
| |A bank cannot rely on a previous determination when it makes a loan, but it can rely on a previous determination when: |
| | |
| |The bank is increasing, extending, renewing or purchasing a loan; |
| | |
| |The determination is no more than seven years old; and |
| | |
| |There have been no map changes since the prior determination. |
| | |
| |When relying on a previous determination, most financial institutions get the previous determination “recertified”—normally |
| |available from the third-party vendor at a minimal additional cost—to make sure there have been no map changes. |
| | |
| |In 2009 the federal banking agencies released a detailed document titled Interagency Questions and Answers Regarding Flood |
| |Insurance. This detailed and instructive document is available on the website of each agency. |
| | |
| |______________________________________ |
| | |
| |There are several new flood insurance rules: |
| | |
| |Exemption for Detached Structures. Under this new rule (already in effect), a structure that is part of a residential property,|
| |but detached from the primary residential structure and not used as a residence, is exempt from the flood insurance |
| |requirements. Be sure to note, however, that detached structures used for commercial, agricultural, or other business purposes |
| |are not eligible for this exemption and are subject to the usual flood insurance requirements. |
| | |
| |Required Escrow of Flood Insurance Premiums. Under this new rule (effective January 1, 2016), banks must escrow all flood |
| |insurance premiums. There are numerous exemptions to this requirement, however, and most smaller community banks will be exempt|
| |from the escrow requirement. |
| | |
| |Force Placed Flood Insurance. On October 1, 2015, the rules on force-placement changed. The updated rules still require banks |
| |to provide a notice if it determines that insurance has lapsed. And as before, the notice cannot be provided until insurance |
| |lapses, and if the borrower fails to obtain insurance within 45 days after notification, the bank is required to purchase |
| |insurance on the borrower's behalf. Note, however, that the new rules permit the bank to force-place insurance immediately |
| |after the original policy lapses. If the borrower obtains a policy that overlaps with the force-placed insurance, the bank |
| |would be required to terminate the force-placed policy and refund any premiums paid by the borrower for the overlap period. |
| | |
| | |
|22 |Creditors typically require title insurance (or some similar method of title protection) even if they are not required to do so |
| |by law or regulation. For that reason, this checklist includes the title insurance "requirement." |
|TITLE INSURANCE | |
| | |
|23 |If a particular individual is indispensible to the operation of the borrower’s business, consider requiring key man life |
| |insurance and naming the bank as beneficiary. If the bank moves forward with the insurance, the lender should verify—prior to |
|KEY MAN |closing—that the bank has possession of the policy, as well as any necessary assignment. |
|INSURANCE | |
| | |
| | |
| | |
| | |
|24 |Loan-to-value limits apply to all loans secured by real estate. The regulatory agencies have established certain limits for |
| |various types of real estate loans and those limits are shown below: |
|LOAN-TO-VALUE | |
|LIMITS | |
| | |
| | |
| | |
| | | |
| |LOAN CATEGORY |LOAN-TO-VALUE LIMITS |
| | | |
| |Raw land |65% |
| | | |
| |Land development |75% |
| | | |
| |Construction: | |
| | | |
| |Commercial, multi-family, and other non-residential |80% |
| |(includes condominiums and cooperatives | |
| | | |
| |1-to-4 family residential |85% |
| | | |
| |Improved property |85% |
| | | |
| |Owner-occupied 1-to-4 family and home equity |A loan-to-value limit has not been established for |
| | |permanent-mortgage or home-equity loans on owner-occupied, 1-to-4 |
| | |family residential property. However, for any such loan with a |
| | |loan-to-value ratio that equals or exceeds 90% at origination, the |
| | |bank should require appropriate credit enhancement in the form of |
| | |either mortgage insurance or readily-marketable collateral. |
| | |
|25 | |
| |If the loan is secured by real estate, make sure the following steps are completed: |
|MORTGAGE | |
| |Obtain completed mortgage (or deed of trust). |
| |If there are improvements on the real estate, verify that improvements are covered by insurance. |
| | |
|26 |When the loan will be secured by collateral, the bank must have the owner of collateral sign a contract in which the owner |
| |agrees to let the bank have the collateral if the loan isn’t paid. This contract is usually called a security agreement, but it|
| |can also be in the form of an assignment. The checklist will help lenders quickly identify the correct form. |
|OBTAIN | |
|SECURITY INTEREST | |
| | | |
| |IF COLLATERAL IS . . . |USE THIS DOCUMENT . . . |
| | | |
| |Life insurance |Assignment of life insurance |
| | | |
| |Certificate of deposit |Assignment of deposit account |
| | | |
| |Deposit account |Assignment of deposit account |
| | | |
| |Investment property (stocks/bonds) |Stock assignment |
| | | |
| |All other collateral |Commercial security agreement |
| | |
|27 | |
| | |
| | |
|PERFECT | |
|SECURITY INTEREST | |
| | | |
| |COLLATERAL |HOW TO PERFECT |
| | | |
| | |Prepare and file a notice of security interest (NOSI). |
| |TITLED VEHICLES |Get the lien noted on the certificate of title. |
| | | |
| | | |
| |FARM PRODUCTS (LIVESTOCK, |Obtain a list of potential buyers from the borrower. |
| |CROPS) |Send a notice of security interest to potential buyers. |
| | |File a financing statement with the central filing office. |
| | | |
| |FIXTURES |File a financing statement locally |
| | | |
| |CERTIFICATES OF DEPOSIT |Take possession of the certificate of deposit. |
| | | |
| |INVESTMENT PROPERTY |BEARER CERTIFICATE (does not indicate name of owner). Obtain physical possession of the |
| |(STOCKS, BONDS, |certificate. |
| |MUTUAL FUNDS) | |
| | |REGISTERED CERTIFICATE (indicates name of owner). Obtain physical possession of the certificate |
| | |and either (i) have the owner endorse the certificate or (ii) re-register the certificate in the |
| | |bank’s name. |
| | | |
| | |UNCERTIFICATED SECURITY (no paper certificate, such as a mutual fund). The issuer must agree in|
| | |writing that it will comply with the bank’s instructions without further consent of the owner. |
| | | |
| |MOST OTHER COLLATERAL |File a financing statement with the central filing office. |
| | | |
| |UNUSUAL COLLATERAL |Check with your compliance officer or supervisor to determine the appropriate perfection method. |
| | |
|28 |Depending on the type of collateral, the lender may want to consider the following additional steps to ensure that the |
| |collateral is protected and can be repossessed if necessary: |
| | |
|ADDITIONAL STEPS | |
|TO PROTECT COLLATERAL | |
| | |
| | |
| | | |
| |IF COLLATERAL IS . . . |TAKE THIS ADDITIONAL STEP . . . |
| | | |
| |EQUIPMENT OR VEHICLES |Verify that collateral is covered by insurance. |
| | | |
| |COLLATERAL ON LEASED PROPERTY |Obtain a landlord’s lien waiver. |
| | | |
| |PMSI (INVENTORY OR LIVESTOCK) |Send a notification to any existing lienholder. |
| | | |
| |PERFECTION BY FILING |Conduct a UCC lien search to check for priority liens. |
| | | |
| | |
| |KEY MAN LIFE INSURANCE. In addition to the additional steps listed above, if a particular individual is indispensable to the |
| |operation of the borrower’s business, the bank might want to consider requiring key man life insurance and naming the bank as |
| |beneficiary. Prior to closing, the lender should verify that the bank has possession of the policy, as well as any necessary |
| |assignment. |
| | |
|29 |When preparing for closing, here are some steps that will be helpful: |
| | |
|PREPARE FOR CLOSING |Prepare the promissory note. |
| |Arrange for and schedule the closing date, time, signers. |
| |If secured by real estate, coordinate the closing with the closing agent. |
| |Prepare an instruction letter to closing agent. |
| |If HMDA applies, obtain and document the loan application register (LAR) information. |
| | |
| | |
| | |
|30 |Here is a partial list of documents that may need to be signed at closing: |
| | |
| |Promissory Note |
|AT CLOSING |Guarantees |
| |Mortgage (or Deed of Trust) |
| |Assignment of Leases and Rents |
| |Commercial Security Agreement |
| |Assignment of Life Insurance |
| |Stock Assignment |
| |Assignment of Deposit Account |
| |Landlord’s Lien Waiver |
| |Listing of Potential Buyers |
| | |
| |If the applicant has waived the copy-of-valuation timing requirement, the copy of the valuation must be provided at closing. |
| | |
| |In addition, the closer will need to obtain any money due from borrower. |
| | |
| | |
|31 |After the loan is closed, make sure these chores are completed: |
| | |
|AFTER CLOSING |Record the mortgage or deed of trust (must be acknowledged). |
| |Record assignment of leases and rents. |
| |File the UCC financing statement (not necessary if collateral is covered by existing filing). |
| |Conduct a UCC lien search to verify bank’s filing. |
| |Disburse funds. |
| |Review documents; organize and assemble files; book the loan. |
| |Document and record any exceptions. |
| |Verify the accuracy of all “uploaded” information. |
| | |
|32 |The requirements of the Servicemember’s Civil Relief Act apply to commercial loans as well as consumer loans. Because of SCRA |
| |requirements generally are not triggered when a loan is initially executed, the checklist does not itemize the requirements. |
|SERVICEMEMBERS CIVIL RELIEF |Bankers should, however, be aware of the SCRA requirements, including the following: |
|ACT | |
| |If a servicemember incurs a debt before entering military service, the interest rate on that debt is limited to 6% during the |
| |period of military service. If the debt is secured by a mortgage, however, the debt is limited to 6% during the period of |
| |military service and for one year thereafter. |
| | |
| |If a legal action to enforce a debt against real estate is filed during, or within one year after the servicemember’s military |
| |service, a court may stop the proceedings for a period of time, or adjust the debt. In addition, a foreclosure will not be valid|
| |if it occurs during, or within one year after the servicemember’s military service unless the creditor has obtained a valid |
| |court order approving the foreclosure. |
| | |
| | |
| | |
| | |
Quick Application Form - for existing borrowers
Applicant(s)___________________________________________________________
___________________________________________________________
Amount requested_____________________________________________________
Purpose of loan____________________________________________________________________________________________________
Collateral_________________________________________________________________________________________________________
________________________________________ ______________ ____________________________________ _______________
Signature of Applicant Date Signature of Applicant Date
-----------------------------------------------------------USE ONLY WHEN GOVERNMENT MONITORING IS REQUIRED---------------------------------------------
| |
|INFORMATION FOR GOVERNMENT MONITORING PURPOSES |
| |
| |
|The following information is requested by the Federal Government for certain types of loans related to a dwelling in order to monitor the lender’s |
|compliance with equal credit opportunity, fair housing and home mortgage disclosure laws. You are not required to furnish the information, but are |
|encouraged to do so. The law provides that a lender may not discriminate either on the basis of the information, or on whether you choose to furnish it.|
|If you furnish the information, please provide both ethnicity and race. For race, you may check more than one designation. If you do not furnish |
|ethnicity, race, or sex, under Federal regulations, this lender is required to note the information on the basis of visual observation and surname if you|
|have made this application in person. If you do not wish to furnish the information, please check the box below. (Lender must review the above material|
|to assure that the disclosures satisfy all requirements to which the lender is subject under applicable state law for the particular type of loan applied|
|for.) |
| | |
|BORROWER |CO-BORROWER |
| | |
|□ I do not wish to furnish this information. |□ I do not wish to furnish this information. |
| | |
|ETHNICITY: □ Hispanic or Latino □ Not Hispanic or Latino |ETHNICITY: □ Hispanic or Latino □ Not Hispanic or Latino |
| | |
|RACE: □ American Indian or Alaskan Native |RACE: □ American Indian or Alaskan Native |
|□ Asian |□ Asian |
|□ Black or African American |□ Black or African American |
|□ Native Hawaiian or Other Pacific Islander |□ Native Hawaiian or Other Pacific Islander |
|□ White |□ White |
| | |
|SEX: □ Male □ Female |SEX: □ Male □ Female |
| |
| |
| |
|TO BE COMPLETED BY LENDER |
| |
|□ This application was taken in person (if applicant chooses not to provide the information, note the data on the basis of visual observation or |
|surname). |
|□ This application taken by mail or telephone or Internet. |
Lender's Name________________________________________ Bank Name_______________________________________________
Lender’s NMLS Identification Number _____________________ Bank's NMLS Identification Number____________________________
GOVERNMENT MONITORING FORM
| |
| |
|APPLICANTS APPLICATION |
|DATE |
| |
| |
|INFORMATION FOR GOVERNMENT MONITORING PURPOSES |
| |
|The following information is requested by the Federal Government for certain types of loans related to a dwelling in order to monitor the lender’s |
|compliance with equal credit opportunity, fair housing and home mortgage disclosure laws. You are not required to furnish the information, but are |
|encouraged to do so. The law provides that a lender may not discriminate either on the basis of the information, or on whether you choose to furnish |
|it. If you furnish the information, please provide both ethnicity and race. For race, you may check more than one designation. If you do not furnish |
|ethnicity, race, or sex, under Federal regulations, this lender is required to note the information on the basis of visual observation and surname if |
|you have made this application in person. If you do not wish to furnish the information, please check the box below. (Lender must review the above |
|material to assure that the disclosures satisfy all requirements to which the lender is subject under applicable state law for the particular type of |
|loan applied for.) |
| |
| |
| | |
|BORROWER |CO-BORROWER |
| | |
|□ I do not wish to furnish this information. |□ I do not wish to furnish this information. |
| | |
|ETHNICITY: |ETHNICITY: |
|□ Hispanic or Latino |□ Hispanic or Latino |
|□ Not Hispanic or Latino |□ Not Hispanic or Latino |
| | |
|RACE: |RACE: |
|□ American Indian or Alaskan Native |□ American Indian or Alaskan Native |
|□ Asian |□ Asian |
|□ Black or African American |□ Black or African American |
|□ Native Hawaiian or Other Pacific Islander |□ Native Hawaiian or Other Pacific Islander |
|□ White |□ White |
| | |
|SEX: |SEX: |
|□ Female |□ Female |
|□ Male |□ Male |
| |
| |
|TO BE COMPLETED BY LENDER |
| |
|□ This application was taken in person (if applicant chooses not to provide the information, note the data on the basis of visual observation or |
|surname). |
| |
|□ This application taken by mail or telephone or Internet. |
| |
| |
| |
|Lender's Name________________________________________ Lender’s NMLS Identification Number _______________________ |
| |
REG O – INSIDER LOANS
ASSUME UNIMPAIRED CAPITAL AND SURPLUS OF $100 MILLION
| | | |
|TYPE OF LIMIT |DETAILS |NOTES |
| | | |
|GENERAL LIMIT | | |
| |Each insider (including his/her related interests) can borrow up |For this category, the term “insider” includes: |
| |to 15% of bank’s unimpaired capital and surplus (plus an | |
| |additional 10% in the case of loans that are fully secured by |Executive officer + related interest |
| |readily-marketable collateral having a market value): |Director + related interest |
| | |Principal shareholder + related interest |
| |$15 million | |
| |$25 million (if secured by readily-marketable collateral) | |
| | | |
|AGGREGATE LIMIT |The total of all loans to insiders (and their related interests) |NOTE FOR SMALL BANKS: |
| |cannot exceed the bank’s unimpaired capital and surplus: | |
| | |If a bank has deposits of less than $100 million, the |
| |$100 million |board can pass a resolution to increase the aggregate |
| | |limit to two times the bank’s unimpaired capital and |
| | |surplus. |
| | | |
|ADDITIONAL RESTRICTIONS |Loans for the education of the executive officer’s children can | |
|FOR EXECUTIVE OFFICERS |be made in any amount, not to exceed the general limit of: | |
| | | |
| |$15 million | |
| |$25 million (if secured by readily-marketable collateral) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |Loans to purchase, construction, maintenance or improvement of | |
| |the executive officer’s residence can be made in any amount, not | |
| |to exceed the general limit of: | |
| | | |
| |$15 million | |
| |$25 million (if secured by readily-marketable collateral) | |
| | | |
| |Loans fully secured by (i) US bonds, notes and treasury bills or | |
| |(ii) deposit accounts of the lending bank can be made in any | |
| |amount, not to exceed the general limit of: | |
| | | |
| |$15 million | |
| |$25 million (if secured by readily-marketable collateral) | |
| | | |
| |Other loans to each executive officer are capped at | |
| |2.5% of the bank’s unimpaired capital and surplus, but that | |
| |amount cannot exceed $100,000: | |
| | | |
| |$2.5 million ( $100,000 | |
DOCUMENTING BUSINESS ENTITIES
| | | | | |
|ENTITY |BIRTH |OPERATING |CERTIF |NOTES |
|TYPE |CERTIFICATE |RULES |OF GOOD | |
| | | |STANDING | |
|CORPORATION | | | | |
| |ARTICLES |BYLAWS |YES |Any resolution older |
| |OF | | |than five years should |
| |INCORPORATION | | |be re-executed. |
| | | | | |
| | | | |The name must include |
| | | | |one of the following |
| | | | |terms: Association, |
| | | | |Church, Club, Co., |
| | | | |College, Company, Corp.,|
| | | | |Corporation, Foundation,|
| | | | |Fund, Inc., |
| | | | |Incorporated, Institute,|
| | | | |Limited, Ltd., Society, |
| | | | |Syndicate, Union or |
| | | | |University. |
| | | | | |
| |Loan over $250,000 (but see exceptions below) |[pic] | | |
|GENERAL | | | | |
|RULES | | | | |
| | | | | |
| |Loan of $250,000 or less (but see exceptions below) | |[pic] | |
| | | | | |
| | | | | |
| |Business loan of $1 million or less –if repayment is not | |[pic] | |
| |dependent on (i) sale of the real estate or (ii) rental income| | | |
|SPECIAL |from real estate (unless exempted below) | | | |
|BUSINESS RULE | | | | |
| | | | | |
| |Same-lender refinancing/renewal with no new money, even if | |[pic] | |
|SPECIAL |“material change”—regardless of loan amount | | | |
|REFINANCING | | | | |
|RULE | | | | |
|________ | | | | |
| | | | | |
|INCLUDES THE ADDITION | | | | |
|OF COLLATERAL WITHOUT | | | | |
|A NEW LOAN | | | | |
| | | | | |
| |Same-lender refinancing/renewal with no material change, even | |[pic] | |
| |if new money—regardless of loan amount | | | |
| | | | | |
| |Same-lender refinancing or renewal with both new money and a | | | |
| |material change: |…………. ……………… | | |
| | | |……… | |
| |• Loan over $250,000………………………………. | | | |
| |• Loan of $250,000 or less ………………………… | | | |
| | | | | |
|SPECIAL |Higher-priced mortgage loans that are not exempt from the |[pic] | | |
|HPML RULE |special HPML appraisal requirements | | | |
| | | | | |
| |Lien taken as abundance of caution (if loan supported by (i) | | |[pic] |
| |borrower’s income or (ii) other collateral) | | | |
|COMPLETELY | | | | |
|EXEMPT | | | | |
|FROM | | | | |
|APPRAISAL | | | | |
|AND | | | | |
|EVALUATION | | | | |
|REQUIREMENTS | | | | |
| | | | | |
| | | | | |
| |Loan not secured by real estate | | |[pic] |
| | | | | |
| |Lien taken only to protect other collateral | | |[pic] |
| | | | | |
| |Loans insured/guaranteed by US government agency | | |[pic] |
| | | | | |
| |Loans that qualify for sale to a US government agency | | |[pic] |
| | | | | |
| |Loans that have an appraisal conforming to the FNMA or FHLMC | | |[pic] |
| |appraisal standards | | | |
| | | | | |
ADVERSE ACTION NOTICES
| | | |
|ACTION |SMALL BUSINESSES |LARGE BUSINESSES |
| | | |
|( |─ GROSS REVENUES OF $1 MILLION 0R LESS ─ |─ GROSS REVENUES IN EXCESS OF $1 MILLION ─ |
| | | |
|APPROVAL OF APPLICATION |Notify applicant within 30 days after completed |Notify applicant within a reasonable time —requirement is |
| |application—requirement is satisfied when the applicant gets|satisfied when the applicant gets the loan. |
| |the loan. | |
| | | |
|ADVERSE ACTION |Mail or deliver Notice of Action Taken within 30 days after |Notify applicant of the adverse action within a reasonable time,|
| |completed application. |either orally or in writing. |
|REFUSAL TO GRANT OR INCREASE | | |
|CREDIT REQUESTED IN A | |If applicant makes a written request for the reasons for the |
|COMPLETED APPLICATION | |adverse action within 60 days of the notification, mail or |
| | |deliver a written statement of the reasons. |
| | | |
|COUNTEROFFER |Mail or deliver notice of counteroffer (part of the Notice |Notify applicant of the counteroffer within a reasonable time, |
| |of Action Taken form) within 30 days after receiving the |either orally or in writing . . . OR |
| |completed application . . . OR | |
| | |Mail or deliver a combined notice of counteroffer and adverse |
| |Mail or deliver a combined notice of counteroffer and |action (denial of the originally requested loan terms). If this|
| |adverse action (denial of the originally requested loan |combined notice is given, a second adverse action notice is not |
| |terms). If this combined notice is given, a second adverse |required if the applicant does not accept the counteroffer. |
| |action notice is not required if the applicant does not | |
| |accept the counteroffer. | |
| | | |
|APPLICANT FAILS TO ACCEPT |Mail or deliver a Notice of Action Taken within 90 days |Notify applicant within a reasonable time, either orally or in |
|COUNTEROFFER |after notifying the applicant of the counteroffer. |writing. |
| | | |
|DOES NOT EXPRESSLY ACCEPT | |If applicant makes a written request for the reasons for the |
|COUNTEROFFER OR USE THE CREDIT| |adverse action within 60 days of the notification, mail or |
|OFFERED | |deliver a written statement of the reasons. |
| | | |
|INCOMPLETE APPLICATION |Within 30 days after receiving the incomplete application, |Notify applicant of incomplete application within a reasonable |
| |do one of the following: |time after receiving the application, by doing one of the |
| | |following: |
| |Deny loan because of incompleteness and mail or deliver | |
| |Notice of Action Taken . . . OR |Deny the loan because of incompleteness and notify the applicant|
| | |of the denial, either orally or in writing. If applicant makes |
| |Mail or deliver a Notice of Incompleteness (part of the |a written request for the reasons for the denial within 60 days |
| |Notice-of-Action-Taken form). If applicant fails to respond|of the notification, provide a written statement of the reason .|
| |within the designated time, bank has no further obligation. |. . OR |
| | | |
| |NOTE: The lender may inform the applicant orally of the |Notify the applicant of the incompleteness, either orally or in |
| |need for additional information, but if the application |writing. If applicant fails to respond within the designated |
| |remains incomplete, the lender must mail or deliver one of |time, bank has no further obligation. |
| |the above notices. | |
| | | |
|WITHDRAWAL OF APPROVED |The application is treated as withdrawn and lender is not |The application is treated as withdrawn and lender is not |
|APPLICATION |required to comply with notification requirements. |required to comply with notification requirements. |
| | | |
|BANK BELIEVES APPLICANT WILL | | |
|ASK ABOUT THE APPLICATION’S | | |
|STATUS, BUT THE APPLICANT | | |
|FAILS TO INQUIRE WITHIN 30 | | |
|DAYS AFTER APPLYING | | |
| | | |
|APPLICATION |Bank need not comply with notification requirements |Bank need not comply with notification requirements |
|EXPRESSLY WITHDRAWN BY | | |
|APPLICANT | | |
IN THE CASE OF MULTIPLE APPLICANTS, GIVE THE NOTICE TO THE PRIMARY APPLICANT
[pic]
In October of 2015, the CFPB revised the HMDA reporting rules. Most of the new rules, however, will not become effective until January 1, 2018. The new rules will include these changes:
• Financial institutions will generally be required to report all closed-end loans, open-end lines of credit, and reverse mortgages secured by dwellings . . . regardless of purpose. Reporting is only required, however, if the institution originated at least 25 "covered loans" (excluding open-end lines of credit) in the previous calendar year. Note that temporary loans and loans primarily for agricultural purposes will be exempt.
• In addition to the currently-reported data, expect to report:
o Whether loan is insured or guaranteed under certain federal programs
o Whether loan is purchase, home improvement, refinancing or "other"
o Postal address of property
o Age of applicant
o Credit score and name of scoring model
o Interest rate
o Term of prepayment penalty
o Debt-to-income ratio
o Loan-to-value ratio
o Term of loan in months
o Number of months until the interest rate can change
o Whether the loan contract includes a balloon payment, Interest-only payments, or negative amortization
o Value of secured property
o If secured property is a manufactured home:
▪ Whether it is classified as real or personal property
▪ Whether the borrower owns the land or leases the land
o If the property is a multi-family dwelling, the number of income-restricted units
o Whether the application was submitted directly to the financial institution
o NMLSR number of the loan originator
o The automated underwriting system used to evaluate the application
o Whether the loan is an open-end line of credit, and whether it is a HELOC
o Whether the loan is subject to ability-to-repay provisions, and whether the loan is a qualified mortgage
-----------------------
MARCH 2016
MARCH 2016
MARCH 2016
Reg B Commentary 7(d)(1)-3
HMDA: Reg C/Appendix B
Reg B §1002.14
31 CFR §1020.220
FDIC: 1993 Financial Institution Letter – FIL-14-93
FED: 1991 Supervision and Regulation Letter – SR 91-20
FDIC’S STATEMENT OF POLICY IS REPRINTED ON PAGE 19.
HELPFUL INFORMATION
Documenting Business Entities - Page 17
Obtain an EIN - Page 18
Fed: 2010 Supervision and Regulation (SR) Letter – SR 10-16
OCC: 2010 Bulletin – OCC 2010-42
FDIC: 2010 Financial Institution Letter – FIL-82-2010
Reg B §1002.14
Reg B Commentary §1002.14(a)(1) ¶4
A HELPFUL CHART OF THE APPRAISAL-AND-EVALUATION REQUIREMENTS APPEARS ON PAGE 21.
Reg B §1002.14
Reg B §1002.9
A DETAILED CHART OF THE ADVERSE-ACTION REQUIREMENTS APPEARS ON PAGE 22.
FDIC: 12 CFR 339
FED: 12 CFR 208.25
OCC: 12 CFR 22
Subsequent transactions by the same institution with respect to the same property are treated as "renewals" (such as assumptions, refinancings and second lien loans).
FDIC: 1999 Financial Institution Letter – FIL-94-99
FED: 1999 Supervision and Regulation Letter – SR 99-26 (SUP)
OCC: 1999 Bulletin 1999-38
HMDA: Reg C §1003.4
Reg C – Appendix A
CONTACT ANNE TO RECEIVE THIS FORM—IN WORD
VERSION—FOR YOUR WORD PROCESSOR
TYPE OF CREDIT
I intend to apply for individual credit.
We intend to apply for joint credit.
APPLICANT(S) INITIAL HERE:
CHANGE IN FINANCIAL INFORMATION?
Has any aspect of your financial status changed since you last provided complete financial information to the bank? YES NO
CONTACT ANNE TO RECEIVE THIS FORM—IN WORD
VERSION—FOR YOUR WORD PROCESSOR
Follow the
GENERAL LIMIT
shown above
HOW TO APPLY FOR AN EIN
If you are a home-care service recipient who has a previously assigned EIN either as a sole proprietor or as a household employer, do not apply for a new EIN. Use the EIN previously provided. If you cannot locate your EIN for any reason, follow the instructions on the Misplaced Your EIN? Web page.
Apply Online
The Internet EIN application is the preferred method for customers to apply for and obtain an EIN. Once the application is completed, the information is validated during the online session, and an EIN is issued immediately. The online application process is available for all entities whose principal business, office or agency, or legal residence (in the case of an individual), is located in the United States or U.S. Territories. The principal officer, general par[?]:fh¦¨ª¬¾àèò ôÝγ¡•ƒq[OKGKC4h?$Lhæ`B* CJ0aJ0phI}h±fhgOhæ`hæ`CJ$OJQJaJ$*jh7=ÃCJ$OJQJU[pic]aJ$mHnHu[pic]#hæ`hæ`5?9?B*CJ(aJ(phiŽ#hgOhæ`5?9?B*CJ(aJ(ph6_‘hæ`CJHOJQJaJH#h?$Lhæ`5?9?B*CJ`aJ`tner, grantor, owner, trustor etc. must have a valid Taxpayer Identification Number (Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number) in order to use the online application.
Apply By EIN Toll-Free Telephone Service
Taxpayers can obtain an EIN immediately by calling the Business & Specialty Tax Line at 800-829-4933. The hours of operation are 7:00 a.m. - 10:00 p.m. local time, Monday through Friday. An assistor takes the information, assigns the EIN, and provides the number to an authorized individual over the telephone. Note: International applicants must call (267) 941-1099 (Not a toll-free number).
Apply By FAX
Taxpayers can FAX the completed Form SS-4 (PDF) application to their state FAX number (see Where to File - Business Forms and Filing Addresses), after ensuring that the Form SS-4 contains all of the required information. If it is determined that the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type. If the taxpayer's fax number is provided, a fax will be sent back with the EIN within four (4) business days.
Apply By Mail
The processing timeframe for an EIN application received by mail is four weeks. Ensure that the Form SS-4 (PDF) contains all of the required information. If it is determined that the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type and mailed to the taxpayer. Find out where to mail Form SS-4 on the "Where to File Your Taxes" (for Form SS-4) page.
OTHER IMPORTANT INFORMATION . . .
Responsible Party
In order to identify the correct individuals and entities applying for EINs, language changes have been made to the EIN process. Refer to Responsible Parties and Nominees to learn about these important changes before applying for an EIN.
Third Party Authorization
The Third Party Designee section must be completed at the bottom of the Form SS-4. The Form SS-4 must also be signed by the taxpayer for the third party designee authorization to be valid. The Form SS-4 must be mailed or faxed to the appropriate service center. A third party designee may call for an EIN; however a faxed Form SS-4, with the taxpayer's signature, is still required. IRS assistors will take the information over the phone from the third party designee and ask the third party to fax the completed Form SS-4 to them (to the IRS assistor's attention) at an administrative fax number. After receiving the faxed Form SS-4, the EIN will be assigned and faxed back to the third party designee, or given over the phone. The third party designee's authority terminates at the time the EIN is assigned and released to the designee.
A “material change” occurs when there is an obvious and material change in the market conditions or in the physical aspects of the property that threatens the adequacy of the bank’s collateral protection.
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