Adverse Action Notice Requirements
by Lucy Griffin, BOL Guru BIO AND CONTACT INFO
Question: Mortgage Banking-Adverse Action- Prequalification (inquiry) process (no written application)- The lender obtains credit information from the consumer, as well as pulls a credit report. If, based on credit information, the consumer can not be offered credit at this time (for example, because of a bankruptcy) and is counseled that once the bankruptcy is cleared up they are encouraged (never discouraged) to return and the mortgage divison would reevaluate, would this constitute a denial and require adverse action?
Answer: Yes. There should be both an adverse action notice for purposes of Regulation B and for Fair Credit Reporting. The report was used to deny credit -- even though the customer was encouraged to come back later. The bottom line is that the customer was told to come back when qualified -- and told he's not qualified now.
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