Kansas
Bankers Association
March 25, 2004
Office of the Comptroller of the Currency
Re: Docket No. 04-05
Federal Reserve Board of Governors
Re: Docket No. R-1180
Federal Deposit Insurance Corporation
Re: EGRPRA Burden Reduction Comments
Office of Thrift Supervision
Re: No. 2003-67
Re: Request for Burden Reduction Recommendations
Federal Banking Regulatory Agencies:
Thank you for the opportunity to share with you, comments that the
Kansas Bankers Association has received from our members on this
most important topic. The KBA is a non-profit organization having
as its members, 355 of the 359 Kansas banks as members.
In order to help us draft a meaningful comment letter, we asked
our members to complete a questionnaire that listed the regulations
dealing with consumer protection and lending-related rules about
which the banking agencies are seeking comments. The questionnaire
asked our members to consider the requirements of each regulation
and comment on whether the requirements were outdated, inconsistent,
duplicative, unnecessary, or unduly burdensome.
The following is a compilation of the results of the answers received
on the questionnaire, including a list of the rules considered to
be most burdensome:
Fair Housing Act.
- Equal Housing
Poster. Several commenters questioned the effectiveness of requiring
the poster to be displayed as it is their observation
that consumers never notice it, let alone read its provisions.
- Equal Housing
Lender Logo. Several commenters also made the observation that
most consumers do not recognize the logo or understand its meaning
so as to render it meaningless and unnecessary.
- Fair Housing
Log. Many commenters felt that the Log was duplicative with the
information
reported under HMDA and served no additional
purpose as Regulation B also prohibits discrimination in lending.
Commenters also observed that the log appears to be unnecessary
as again, nobody asks to see it – not even examiners.
Flood Disaster Protection Act.
- Written notice
to borrower that property is in a flood hazard area. While
most commenters
agree that having flood insurance is
a positive thing for those homeowners in a flood hazard area,
several questioned why the banking industry had to police the
borrower’s
choices. One commenter asked if the $5,000 value threshold could
be increased. Another commenter urged more guidance on a specific
period in which the notice should be given.
Equal Credit Opportunity Act.
- Notice of Adverse
Action. One commenter observed that consumers do not appreciate
getting this notice and compared it to rubbing
salt in a wound.
- Right
to receive appraisal reports. Several commenters felt that the
requirement of having to give notice of the right to receive
an appraisal and have the customer sign off on receiving that notice
was unnecessary. These commenters observed that the rule requiring
banks to give a copy of the appraisal upon request was sufficient
and that this disclosure was overlooked by the customer and burdensome
to the bank (especially in requiring the right to an appraisal to
be repeated when cross-collateralizing a loan).
Credit Practices Rule.
- Prohibition
against security interest in household goods. Two commenters
offered that many consumers would like to pledge non-possessory,
non-purchase money household goods as collateral and are dumbfounded
when they are told they cannot. Perhaps the regulation could
be amended
to allow this with some limitations.
Home Mortgage Disclosure Act.
- Collecting
information on applicant and on the home-improvement or home-purchase
loans. Many commenters shared that this is one of
the most burdensome regulations they face. Many questioned whether
the information gathered is effectively used by anyone other
than consumer advocate groups to generate headlines.
Several commenters
suggested that perhaps having a small-bank exemption for asset
size similar
to the CRA small bank examination rule would
help reduce the burden on the smaller banks that fall under the rule
simply because they are included in an MSA by proximity. One commenter
suggested that the percentage of the bank’s loan portfolio
of loans that are actually made in the primary MSA should determine
whether a bank should be required to report under HMDA. It was also
pointed out that these small banks tend to know their customers well
and collecting the information required by the Act on these applicants
is unnecessary. One commenter believes that “years in school” is
very unnecessary information with regard to establishing creditworthiness.
Truth in Lending.
- Terminology.
Many commenters believe that customers are no better served by
banks all using
the same terminology as these terms are
still foreign and confusing to the customer (egs., APY, APR, finance
charge). Customers still ask the lender what the interest rate is – even
after having all these terms in front of them.
- Disclosures.
Many commenters observed that their customers very rarely read
any of the disclosures made under TILA as the customer
feels they are overburdened with paperwork when they come to get
a loan. HOEPA disclosures are confusing to the customer. At the
very least, several suggest that having the HOEPA 3-day period
coincide
with the Right of Rescission period would be less confusing for
all.
- Right
of Rescission. Almost every commenter believes that the Right of
Rescission is
unnecessary – especially for those customers
who come in to the bank seeking a loan (as opposed to a customer
who is solicited for a loan). Many commenters suggested that the
rule be amended to allow customers to waive this for reasons others
than a bona fide emergency. One commenter suggested that instead
of requiring a separate disclosure (since so few customers ever exercise
this right), that the Right of Rescission could be disclosed along
with the other TIL disclosures.
List of Most Burdensome Rules.
1) ECOA and Regulation B. Especially in light of the new (and seemingly
more confusing) rules regarding signatures of applicants and non-applicants.
2) TILA. The terms and disclosures are meaningless to customers
and so do not serve the purpose of allowing customers to compare
credit terms. Customer are overwhelmed by the paperwork!
3) HMDA. Compiling the data is extremely burdensome and there are
many questions about its usefulness.
4) RESPA. Holding up the transaction for three days during the Right
of Rescision period is frustrating for most customers.
5) FHA. The usefulness of the poster and logo are highly questionnable.
Information required in the log is duplicative and burdensome.
In conclusion, we would like to thank you once again, for the opportunity
to present these comments and join in your efforts to weed out
the rules and regulations that are particularly burdensome or that
no longer provide meaningful information to the consumer.
Sincerely,
James S. Maag
President
Kathleen Taylor Olsen
Associate General Counsel
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