[jsecor]

We are considering partnering with a company that offers student loan programs. The banks job as a partner would be to advertise and market on our website and in print and refer loans on to the company. In exchange we would receive a small loan referral fee. We’ve never offered student loans before or referred them. Would this trigger any disclosures if we are not the ones making the loan? Also is there anything else to consider? Anyone else have this type of referral program?

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[rcooper]

I have never seen this arrangement, so I agree, it would probably help you to find a bank that does something similar to see how their examiners have reacted to it. From my experience, I’ve also found it helpful to run the idea by your regulator before implementing – they may offer some good suggestions and, at the leas,t they have less argument against it if they contributed to the setup. A few things to think about when considering this arrangement are: 1) your privacy policy (make sure it accurately reflects how you’ll be handling customer information, determine if any exceptions apply and, if required, give them the option to opt-out); 2) ensure disclosures are given timely – who’s taking the application/soliciting (12 CFR 1026.46(d) discusses the timing requirements for disclosures applicable to private education loans); and 3) Section 8 of RESPA shouldn’t apply if it is a private education loan per Reg Z as they aren’t secured by real estate, but be aware if you refer a RESPA covered loan there are prohibitions against kickbacks.

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