From: Kim Anderson [mailto:KAnderson@RoyalBank-usa.com]
Sent: Tuesday, April 20, 2004 9:07 AM
To: Comments
Subject: EGRPRA Burden Reduction Comment
Federal Banking
Regulatory Agencies:
Thank you for
the opportunity to comment on the lending-related regulatory
burden under which insured financial institutions must operate. Some of our
concerns are as follows:
RESPA
Servicing Disclosure:
The only information that the customer might be
interested in on the Servicing Disclosure is whether or not their loan will
be transferred to another financial institution. This fact could be
included with the Good Faith Estimate within 3 business days instead of
having a separate piece of paper that must be provided at the time of
application.
The percentage
of loans sold in the past and the fact that we have sold
loans in the past is not very helpful to the customer. The Transfer
Practices and Requirements, Complaint Resolution and Damages and Costs are
not relevant at all at the application phase. If the loan is transferred,
this information is contained in the Notice of Assignment, Sale or Transfer
of Servicing Rights that is provided to the customer at closing.
Good Faith Estimate:
The Good Faith Estimate is just an estimate and should
be based on the customer's original request. During the course of
processing an application, changes do occur that are out of our control.
Controlled Business
Arrangement Disclosure: The Controlled Business
Arrangement Disclosure Statement is unnecessary. Our bank is affiliated
with an insurance agency. We may refer customers to the insurance agency
for a quote for hazard insurance, but we do not require them to obtain
insurance through the agency. In fact, under Reg. Z, all of our
truth-in-lending disclosures include the statement that the customer may
obtain property and liability insurance from anyone that is acceptable by
us.
If there was
a situation where we were affiliated with an attorney, credit
reporting agency, or real estate appraiser, and we required the use of that
particular provider, then it would be disclosed on the Good Faith Estimate
under Required Service Providers and we would indicate the fact that the
provider was an associate. The Controlled Business Arrangement Disclosure
is not needed.
HUD-1 or HUD-1A:
In a purchase situation, why is the buyer's lender
required to complete the information for the seller? We are making a loan
to the buyer for the purchase of property. The actual transfer of that
property is usually handled by either an attorney or real estate agent.
It would be helpful
if there were more lines available in the 800 section
" Items Payable in Connection with Loan". Perhaps one or two lines
from each
of the 1100 and 1300 sections could be shifted to the 800 section.
TRUTH-IN-LENDING
- REG. Z
Right of Rescission:
The Right of Rescission is unnecessary, especially
when you consider that consumers approach us with their loan requests. When
a customer wants to refinance their home loan to take advantage of lower
interest rates, or they want to use the equity in their home to buy a new
vehicle or pay for college tuition, they don't understand why they have to
wait three business days before they can get their money. All they know is
that they are paying a higher rate at another financial institution, or they
can't pick up their new vehicle right away.
Disclosures:
Customers don't care what the "annual percentage rate" is
-
they want to know the interest rate and how much their payments are going to
be. As far as what fees are included in the calculation of the annual
percentage rate, customers are usually provided a Good Faith Estimate under
RESPA, or if RESPA doesn't apply, the itemization of amount financed shows
all the fees for their loan.
HOEPA: We've
yet to have a loan that is subject to HOEPA. But, basically,
this section comes into play when a loan has credit insurance. The
" pre-consummation waiting period" is confusing, and could cause a
hardship
for customers that would have to come into the bank to receive the HOEPA
disclosures, then come back in three business days later to actually close
their loan. And, if rescission applies, wait another three days before they
can get their funds! If the disclosures are mailed, would customers
actually read them - much less understand them? And how do we determine
when the disclosures were received by the customer so we know when the loan
could close? I suppose IF a loan is subject to HOEPA, then a Right of
Rescission could be provided to give the customer a chance to cancel the
transaction.
EQUAL CREDIT
OPPORTUNITY ACT - REG. B
Government Monitoring
Information: Here's a situation where a financial
institution is in trouble if this information is not collected when it was
supposed to be collected, and in trouble if it's collected when it wasn't
supposed to be collected. If a loan is going to be secured by the
applicant's principal dwelling, wouldn't it be easier just to collect it?
HMDA
Our institution
has approximately $130 million in assets - a relatively
small bank holding company with 11 offices located in Central and
Southwestern Wisconsin. As of January 1, 2004 our organization became
subject to HMDA because two of our offices are located in a county that was
incorporated into a larger metropolitan statistical area. These two offices
are located in villages with populations of 442 and 608, respectively.
The data collection
requirements of this law are extremely time-consuming,
burdensome and confusing. The "refinance" category is extremely confusing,
especially for business-purpose loans secured by a dwelling.
It is understandable
that various agencies and consumer groups want to know
whether an institution is serving the housing credit needs of their
neighborhoods and communities, but small community banks are not the
problem. We understand how important it is to serve the people in our
communities. We also understand the realities of the marketplace - that if
we are not competitive, our customers will go to other financial
institutions for their credit needs. And, finally, if we are
discriminatory, most people would not hesitate to file a complaint with our
regulator and/or file a lawsuit. Both are pretty good incentives to play
fair.
I suggest that
there be a small bank exception for HMDA, just like there is
for CRA. Hopefully, the small bank threshold will be raised from $250
million to $500 million. Then the data reported may be more helpful to see
if the large financial institutions are serving the credit needs of the
communities.
Thank you, once
again, for the opportunity to comment on the various
regulatory burdens imposed on the banking industry.
Sincerely,
Kim Anderson
V.P. / Compliance Officer
Royal Bank
P.O. Box 116
Hillsboro, WI 54634
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