Pub. 8 2020 Issue 4

19 The Community Banker HMDA. Q: The bank owns an insurance company. Would an insurance company employee be considered an employee of the bank, allowing the income field to be “N/A”? A: Only if the insurance company is the equivalent of a department of the bank. If it is set up as a separate company (owned by the bank or by the bank’s holding company), then the actual income relied on may not be excluded. MLA/SCRA. Q: We have a former active-duty member who just got out of the service last week. The loan is to purchase a vehicle. Do we have to do the Military Lending rate or is this exempt? We thought of asking for his discharge papers to show he is no longer in the service. A: If the “Military Lending rate” you refer to is the 6% limit set by the Servicemembers Civil Relief Act (SCRA), then it does not apply in this case because the SCRA applies to pre-service debt when a service member enters active duty. If you refer to the Military APR (MAPR) limit of 36% set by the Military Lending Act (MLA), it also does not apply in this case since the customer is no longer on active duty. However, under the MLA rule, you will still need to verify the customer’s active duty status—which can be accomplished by inquiring of the Department of Defense (DoD) database or getting a credit bureau report that includes a check of the DoD database. BSA. Q: We have an account titled ABC Rentals LLC Jane Smith Sole Member. John and Jane Smith are both authorized sign- ers on the account. John comes into the branch and withdraws $21,000.00 in cash from this account, and Jane is not present. How many Part I’s should be completed on the Currency Transaction Report (CTR)? My thoughts were only two, one for the LLC and one for John. But now I’m not sure. A separate question —We have a new account titled John Smith DBA Smith Construction. The account is held under Smith’s Construction Employer Identification Number (EIN), and when I look on the state website, I do see Trade Name Registra- tion documentation. Would this warrant a Beneficial Ownership form? The DBA is throwing me off. A: Re: ABC Rentals — Just the two Part I’s, for ABC Rentals LLC and for John. Jane’s role as an LLC member is analogous to that of a stock- holder for another corporation. Re: Smith Construction—No, no CDD/BO form is necessary. This is a sole proprietorship, operating under a DBA/”fictitious name,” but that does not make it a “legal entity” requiring all the CDD/BOdocumentation. ECOA/TILA. Q: Our borrowers applied for secondarymarket financing. We know right away after pulling a credit report that it will not qualify to go that route. However, we can do it as a portfolio loan. Canwe now initially disclose a portfolio loanwith a “variable condition commitment” that they did not qualify for the original request and qualify for a portfolio loan? Or, dowe have to disclose it as an FHLB loan, then turn around and disclose it as a portfolio loan? A: Regulation B allows for pretty much whatever back-and-forth that goes on in the application process during the 30-day countdown between “completed application” and when notice of action must be given. So, you have some flexibility in how to handle this. If you are using their original application as an application for a mortgage loan — secondary market or portfolio, whichever they qualify for — then a notice of action taken is not required for the change from secondary to portfolio, as long as Regulation B’s timing is met. Of course, the file should be documented (e.g., a memo) as to what happened. You could send them a notice of counteroffer, if you want, as a way to document the file — and proceed with the portfolio processing. If you require separate applications — a secondary market one that is denied, followed by a portfolio one you proceed with— you will have to have some written notice of action taken on the secondary one. With TRID disclosures (the Loan Estimate, LE), if the decision to switch and any notice to the borrower occurs within the three busi- ness days after the original application, only one LE need be provided (presumably for the portfolio loan). If the decision, etc., occurs after that third business day, an LE for the second option better have been provided within the required time. From your description, it sounds like another LE will follow it for the portfolio loan within three busi- ness days after the switch/new application (with changed circum- stances documentation if a secondary loan LE has been provided before the switch in the switch scenario). Bill Showalter, Senior Consultant, Young & Associates, Inc., provides banks and thrifts with support for their compliance programs, independent reviews, and in-bank training and a full menu of management consulting, loan review, IT consulting, and policy systems.