Counteroffers and Reg B
by: Andy Zavoina, BOL Guru
BIO AND CONTACT INFO
Question: I have a question regarding the counteroffer/adverse action provisions of Reg. B. Does a change in the "terms" of credit only apply to rate, amount, loan term, or to other aspects of the transaction? For example, if we condition a mortgage loan approval on a new roof or other work requirements, does that constitute a counteroffer and would we have to provide an adverse action letter if the borrower doesn't want to perform the work and declines the loan offer?
Answer: Reg. B defines terms as (§202.2 Definitions. Paragraph 2(c)(2)(v)) "interest rate, length of maturity, collateral, or amount of downpayment".
You could classify your scenario as a counteroffer based on the collateral, because it is not acceptable in its current state of repair.
This would be the safe route.
First published on BankersOnline.com 6/17/02
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