request for an additional or replacement credit or debit card
and shortly afterwards receives a change of address request,
it must notify the cardholder or otherwise verify the validity
of the change of address. In these cases, banks might want to
retain evidence of compliance and fraud prevention efforts.
These are the types of issues banks should consider when
developing a policy and procedure for handling returned
mail. (Response Provided January 2018.)
Does Intent to Imply provide consent
to pull a Credit Report?
QDoes one person’s indication on a phone or online application of an intent to apply jointly provide a
permissible purpose to pull a credit report on the other
AYes. For joint applications, where the person presenting the application is asserting a joint intent, the absent
joint borrower’s credit report may be obtained. For
example, in an online situation, the lender does not know
who is completing the application, but can assume that both
individuals are not typing simultaneously. If, in fact, the
absent spouse is unaware or has not actually agreed, then
the person applying may be guilty of loan fraud. (Response
Provided January 2018.)
Right to Rescind on Construction
to Permanent Loan
QOur bank is making a construction to permanent loan to a customer who owns the land free and clear. The
loan is to for the purpose of constructing a modular home
that will be his primary residence. The customer is currently
living in a rental property. Does the right to rescind apply?
ANo. Loans to finance the acquisition or initial construction of the customer’s principal dwelling are exempt from
the right of rescission. (See §§1026. 3( 24) and 1026.23(a) of
Regulation Z.) In addition, Comment 7 to §1026.2(a)( 24)
specifically provides: “Construction on previously acquired
vacant land. A residential mortgage transaction includes a
loan to finance the construction of a consumer’s principal
dwelling on a vacant lot previously acquired by the consumer.”
(Response Provided January 2018.)
Appraisal Notice for Loan Renewal?
QDoes our bank have to provide the appraisal notice required under Regulation B for a loan renewal?
AIt depends on whether the bank is relying on an existing appraisal or creating a new one. Generally, §1002.14(a)( 2),
requires creditors to provide a notice of the right to receive a
copy of all written appraisals developed in connection with the
Comment 2 to §1002.14(a)( 1) clarifies that, for renewals,
the appraisal notice requirement applies when an applicant
requests the renewal of an existing extension of credit and the
creditor develops a new appraisal or other written valuation.
It does not apply if a creditor uses an appraisal developed in
connection with a prior credit application. (Response Provided
January 2018.) ■
CAFP, Director of
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Answers do not provide, nor are they substitutes for, professional