With so much focus on Consumer Compliance documentation, on occasion it can be useful to step back and take a look at some of the most common commercial compliance documentation questions/potential pitfalls. Here are just a few documentation items for consideration.
Flood
Flood insurance applies for each collateral improved piece of real estate located in a special flood hazard area. This includes “abundance of caution” or “incidental collateral.”
Commercial Loans
- Joint application acknowledgement (individuals)
- Beneficial Ownership Certification (as applicable)
- Business entity verification with appropriate State authority (e.g., Secretary of State)
- Remember spousal guaranty rules – can’t require spouse unless require all corporate officers and spouse is a corporate officer
Commercial Loan (Real Estate Secured)
- Appraisal Notice
- OFAC – Borrower, Beneficiaries, Guarantor, POA’s; OFAC or non-customer seller on purchase transaction prior to proceeds disbursement
- Environmental Phase I
- Determination if LTV over Supervisor Limit
- HMDA applies only if secured by a dwelling and made to purchase a dwelling, to refinance a dwelling, or to make home improvements. Short-term builder loans are not reportable and business spec. loans are not reportable.
Of course, Regulation O applicability should be considered as well.
Hopefully, this brief summary of these few items on the commercial side will be of benefit.