# CU Loan declined



## toni_mrphy (28 Apr 2015)

Hi 

A friend of mine is looking for some feedback . She requested a loan from CU - below are the details 

Current shares : €3726
Loan : €5300

She requested a loan of €700 - she emailed her payslips but the CU requested three months of bank statements .
She never had to provide this before so she asked why to which they replied “ Due to compliance legislation we have to get bank statements when there is a difference of greater than €1500.00 between the shares and loans balances, this is to show the members ability to pay.” 


She then requested the CU to “ set off all my shares and accrued interest in excess of €100 against my loan” It is our policy not to transfer Shares off the Loan until the loan balance is equal to the shares.  We hold all shares as security against the loan until they reach this point.

Are both statements from the CU correct?

I am in the same CU and owe more then €1500 and have never been requested to send in Bank statements 

Thanks


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## emeralds (28 Apr 2015)

But have you applied for a new loan or loan top up? If you do then they will look for them. Our CU has a notice prominently displayed that all loan requests must be accompanied by 3 months bank statements.


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## WizardDr (29 Apr 2015)

SI 281 2010 European Communities (Consumer Credit Agreements) Regulations 2010 (‘Credit Agreement Directive”) with an obligation to assess creditworthiness of consumers.
_
Obligation to assess creditworthiness of consumers  _
11 (1): Before concluding a credit agreement with a consumer, a creditor shall assess the consumer’s creditworthiness on the basis of sufficient information,where appropriate obtained from the consumer and, where necessary,on the basis of a consultation of the relevant database.

The Central Bank then say in a letter on Prudent Lending:

"The borrower should also be required to produce any other supporting documentation to assess creditworthiness (e.g. proof of income, current account, credit card and other mortgage statements).
We expect that all additional credit applications will be supported by adequate evidence to illustrate that appropriate credit assessment has taken place and that such evidence will be retained on file and be available to us in the event of an inspection.”

The Directive (as implemented) is much softer than the CBI letter - but even the letter has stated 'adequate evidence' and then also states:

“… In order to fully assess a borrower’s ability to repay the loan, the Central Bank’s expectation is that you will avail of at least one of the following:
1.  Employ the services of a suitable credit bureau or credit reference agency;

2.  Require the borrower to obtain confirmation from the private dwelling mortgage lender on the payment status of their mortgage.

3.  Require the borrower to provide an up to date mortgage statement covering a 12 month period;

4.  Such other process employed by you to determine if the borrower is in arrears on their mortgage.”



So confusion reigns as the Credit Directive applies on loans over €200 (two hundred euro).

Some would say that the Central Bank overreacted to the unsubstantiated horror stories told by weeping Bankers that mortgage customers were paying Credit Union loans ahead of the mortgage ..and so the CBI reacted.

So if you were a Credit Union what would you do?

Mind you the $64 questions:

How many banks were not rescued in Ireland?  Answer NONE

How many Credit Unions (out of 400 failed)?


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## Bronte (30 Apr 2015)

It's not wide surely to be borrowing more money if one has not paid down the current loan.  That looks like a sure way of sinking further into debt. 

In some countries it is now compulsory that for example your cannot keep a credit card debt for longer than a certain period (about a year or two), this is to stop people being constantly in debt and paying nothing but interest.


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