Gosh, I hope someone can offer some advice. Surely, I'm not the only one with this problem, because surely other bank management comes up with hairbrained ideas too.
At my bank, home improvement applications (among others) are submitted to a central underwriting department for an initial credit decision. If the decision is a decline, the loan officer has certain specific criteria he or she can use to override that decision and approve the loan.
So here's what happens. The underwriting department denies the loan within three days and sends the denial (no GFE required). Subsequently (more than three days later), the lender overrides the decision and grants the loan. Now there's a violation for not sending the GFE within 3 days.
As a solution, the underwriting department and lenders have suggested that the first denied application be allowed to remain declined and the lender must resubmit the application with an override decision for approval. That might solve the GFE problem, but it seems to me that we'd have a HMDA problem in that the same application is submitted as declined and approved. Also, the applicant has received an adverse action notice and well as approval notification.
The only solution I see is for a GFE to be sent regardless of the expected outcome of the underwriting/override. Management does not want to do it this way.
Please provide some feedback. I'm at the end of my rope on this.
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