Incomplete mortgage applications
Question: If a consumer applies for a loan and we discuss the loan product, and the consumer needs to provide additional information but doesn't return with a formal request or additional information, should we treat this as a denial or a withdrawal?
Answer: If you don't actually have an application, you have neither a withdrawal or denial. You don't have an actual request for credit. However, if the consumer failed to pursue the application because the lender indicated the chances of approval were low, you would have adverse action. So everything depends on that initial conversation and what the consumer understood. The lender should document every such conversation well enough that the examiner can reach the accurate conclusion later on.
It is also important to have the conversation documented if the lender pulled a credit report. Examiners are comparing credit bureau bills with application files to determine whether the lender had a legitimate business purpose to obtain the report.
Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 13, 11/02
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