Question: We really appreciate your weekly FAQs! We have always assumed that we had a pre-existing business relationship with our borrowers. But our regulator has told us that there are guidelines for this exception. Would you please outline the guidelines for us?
Answer
Thank you for the kind words about our FAQs. Much appreciated!
A “pre-existing business relationship” is a relationship between a person or a person’s licensed agent and a consumer based on:
►A financial contract between the person and the consumer that is in force on the date a solicitation covered by the affiliate marketing provisions is sent to the consumer;
►The consumer’s purchase, sale, or lease of the person’s goods or services, or a financial transaction (including holding an active account or a policy in force or having another continuing relationship) between the person and the consumer during the eighteen-month period immediately preceding the date a solicitation covered by the affiliate marketing provisions is sent to the consumer; or
►An inquiry or application by the consumer regarding a product or service offered by the person during the three-month period immediately preceding the date a solicitation covered by the affiliate marketing provisions is sent to the consumer.
[12 CFR § 334.20(b)(4) – FDIC; 16 CFR § 680.3(j) – FTC; 12 CFR § 222.20(b)(4) – FRB; 12 CFR § 41.20(b)(4) – OCC; 12 CFR § 717.20(b)(4) – NCUA]
Regarding the third item, please note that the affiliate marketing rules of the federal financial institution regulators and the Federal Trade Commission include examples of when there is and when there is not a pre-existing business relationship.
Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at [email protected] or visit LendersComplianceGroup.com.
