From: Al Vermeer [mailto:alv@peoples-ebank.com]
Sent: Thursday, April 01, 2004 5:44 PM
To: Comments
Subject: EGRPRA Comments
Al Vermeer
1230 Valley Dr.
Rock Valley, IA 51247
April 1, 2004
Dear FDIC:
I am writing on behalf of Peoples Bank, a state-chartered bank located
in
Rock Valley, Iowa. Our customer base is primarily agricultural and
rural
with lending activities are broad based and include agricultural,
commercial, consumer and real estate lending. Our current asset size
is
$160,000,000 with a total consumer and residential real estate loan
portfolio of $30,000,000. We appreciate the efforts of the Office
of
Comptroller of the Currency, Federal Reserve Board, Federal Deposit
Insurance Corporation and Office of Thrift Supervision, “the
Agencies”, in
reviewing the current consumer regulations to identify outdated,
unnecessary, or unduly burdensome regulatory requirements pursuant
to the
Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).
We also appreciate the Agencies’ recognition and understanding
of the
challenges faced by community banks in meeting the requirements of
the
ever-growing number of compliance regulations.
I would like to offer the following comments regarding the current
regulatory rules and environment:
Equal Credit Opportunity Act (Reg. B)
The recent revisions to Reg. B which prohibit lenders from assuming
the
submission of a joint financial statement constitutes a request for
joint
credit and now requires whenever more than one individual applies
for
credit, those applicants sign a separate statement of intent to apply
for
joint credit creates additional documentation for creditors and is
often
very difficult to manage, particularly in commercial and agricultural
transactions involving two or more borrower who are operating the
business
jointly but have not legally organized; for example a husband and
wife or
father and son operating a farm together. Many of these borrowers
consider themselves a “partnership” although they are
not legally
organized as such. Rather than evidencing intent for each application,
creditors should be given the latitude to evidence intent for a specific
purpose, such as 2004 agricultural operating expenses. Many times
business borrowers have unanticipated credit needs and time is of
the
essence in filling those needs. If a creditor determines the borrowers
are creditworthy and the purpose of the loan meets the intent statement
previously affirmed, it seems redundant and burdensome for both the
applicant and creditor to obtain an additional statement of intent
for
each application/loan for that intended purpose.
The collection of monitoring information continues to be problematic.
Lenders are often confused as to when to collect the data and when
it is a
violation to collect it. With the growing use of home equity loans
and
lines of credit in the market place, does it not make more sense
to either
collect monitoring data for all loans secured by a borrower’s
principal
dwelling or eliminate collection all together for non-HMDA and small
bank
CRA reporting entities? It certainly would lead to less Reg. B violations
during exam procedures. The Agencies can be assured if a bank were
guilty
of discriminatory practices, local consumer groups, state’s
attorney
generals and individual consumers would alert them.
Truth-in-Lending Act (Reg. Z)
The purpose behind the Truth-in-Lending Act, to provide consumers
with
disclosures regarding the total cost and terms of their credit extension,
is necessary. However the current approach and disclosure requirements
often leave consumers more confused than informed.
Most consumers want to know three things: (1) their interest rate;
(2)
their monthly payment; and (3) the total closing cost amount. The
most
common comment/question that occurs after sending out an early TIL
to a
consumer is “I thought your said my interest rate was x%; this
disclosure
states the APR is y%.” The annual percentage rate does not
fulfill its
intended educational purpose – it confuses both consumers and
loan
officers alike. Provide consumers with the information they need
to know
to make an informed decision: the interest rate, the loan term, the
monthly payment and total of all payments. Once consumers have this
information along with the closing cost information provided on the
GFE,
let’s give them the benefit of the doubt that they can figure
out which
loan product best fits their financial needs.
Many of today’s
consumers are quite savvy and seek out home equity loans
and lines of credit as a tax reduction tool. They fully understand
that a
security interest that is being taken in their personal residences
but
prefer the product due to the tax deductibility of the interest paid
and
preferable rates and terms often associated with it. These consumers
consider the three-day waiting period a nuisance, not a consumer
protection device, and would much prefer to waive their right rather
than
wait three days for their funds. Given that the rescission rules
were
intended to protect consumers from unscrupulous financers, the greater
majority of which are unregulated, would it not make sense to allow
consumers borrowing from a federally-regulated financial institution
have
the ability to waive their right to rescission in instances other
than a
personal bona fide emergency?
Once again, thank you for your willingness to consider changes to
these
regulations.
Once again, thank you for the opportunity to comment on these very
important issues. I appreciate your serious consideration of my concerns
over the above-mentioned regulatory burdens currently facing America's
community banks.
Sincerely,
Al Vermeer
|
