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October 29
Documenting an Applicant's Intent to be a Joint Applicant;
David Dickinson

November 4
Issues with Deceased Customers;
Mary Beth Guard and John Burnett

November 5
Vault Burglaries, Floods, Fires & Other Disasters;
Dave McGuinn

November 6
MLO v LO - Who Has to Do What?;
Jack Holzknecht and Mary Beth Guard

November 13
Domestic Violence & Workplace Violence: There Is A Link;
Shelly Collins and Dana Turner

November 18
Understanding USPAP and Regulatory Guidelines for Appraisal and Evaluation Compliance Reviews;
Eric Collinsworth



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#1640331 - 12/16/11 05:00 PM adverse action needed on broker loan request
Chocaholic Offline
Gold Star

Registered: 08/15/05
Posts: 364
Loc: Northwest
We are now receiving requests from a mortgage broker from dentists who are looking for financing to purchase a dental practice. the amount of information we receive is limited and we issue an expression of interest back to the broker if we are interested in receiving an application. Typically revenues are under $1mil
two part question;
Do we need to send a notice of adverse action if we are not interested..
Is it permissible to send it to the broker as they are sending this package to several lenders?

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Lending Compliance
#1640352 - 12/16/11 08:54 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
"we issue an expression of interest back to the broker if we are interested in receiving an application."

How are you making that determination? Sounds like potential prescreening to me..... You either accept them or you don't.
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The opinions expressed are my own, take them or leave them.

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#1642010 - 12/21/11 03:38 PM Re: adverse action needed on broker loan request [Re: rlcarey]
Chocaholic Offline
Gold Star

Registered: 08/15/05
Posts: 364
Loc: Northwest
we are first determining if they are within our market area, then if they are and they are requesting a product we offer, we issue an expression of interest and request the clients complete an application and the file then goes through our normal process. If they don't qualify, aren't in our market area, or meet our standards/product request we are not having the client make an application.
My question revolved around this process, do we send a declination to the client, or to the broker as the broker has sent this request out to multiple lenders in the area..As these are business clients we would decline the loan, out of market area, request for product not offered or some other appliable reason. It is unlikely we will have enough information to make a credit decision, i.e. no credit report, no full financial information etc., typically what we will see is P & L on the selling practitioners business and maybe a tax return from the purchaser... but very limited information. Thank you for any help!


Edited by Chocaholic (12/21/11 03:45 PM)

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#1650927 - 01/13/12 12:25 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
Mrs. Rizzo Offline
10K Club

Registered: 03/07/06
Posts: 10385
Loc: Curled up by the fire...
I'd decide, if under Reg B, you have taken an application. If you haven't, then you wouldn't need to send an adverse action to the borrower or the broker.
If you have, then you would need to send one. You have the option of sending directly to the applicant or notifying the broker. I'd recommend having it in policy whether you will be sending to borrower or broker and keep it one or the other. You might want to have some type of agreement or statement so the broker knows if they are responsible.
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Take responsibility for your life.

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#1650979 - 01/13/12 01:02 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
If a broker contacts you and only asked about whether you would accept an application based on the location of the applicant and whether they fit into the type of loan products that you offer, I would not deem that an application as long as you didn't receive any specific applicant information.

I would never put the burden of meeting the bank's regulatory obligations back on the broker even though it may be allowed. I would never assume that sort of risk.
_________________________
The opinions expressed are my own, take them or leave them.

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#1651044 - 01/13/12 01:35 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
Mrs. Rizzo Offline
10K Club

Registered: 03/07/06
Posts: 10385
Loc: Curled up by the fire...
On that subject...would you say that industry standard for Bank's regarding the bank or the broker sending AAN is for the bank to send directly to the consumer? I agree with the risk of never knowing if the broker actually sent the notice. Just wondered what you had seen, Randy.
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Take responsibility for your life.

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#1651048 - 01/13/12 01:52 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
Haven't seen a bank rely on a broker in years. There are a lot of pitfalls dealing with brokers unless you have some really good broker agreements in place, especially if you are dealing with consumers. Like they never tell the customer that they sent the application specifically to you. In that case, you telling the broker whether the customer qualifies for a loan or not with your bank turns the bank into a consumer reporting agency.
_________________________
The opinions expressed are my own, take them or leave them.

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#1651066 - 01/13/12 01:57 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
Mrs. Rizzo Offline
10K Club

Registered: 03/07/06
Posts: 10385
Loc: Curled up by the fire...
Oh, yes. I meant if you do actually take an app from a broker and make a credit decision. I've seen lenders send them directly to the broker and make it the brokers responsibility to notify the consumer. Usually that is covered in the agreement established between the lender and broker.
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Take responsibility for your life.

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#1651105 - 01/13/12 03:00 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
Like I said, I have not personally seen this happen in years. Also, if the customer gets the turn down directly from the bank and approaches the bank and says how did you get my application, you can bet dollars to donuts that the dealer is probably in default with more than just that section of the agreement. It can serve as an internal control to monitor your dealer's compliance with your agreements.
_________________________
The opinions expressed are my own, take them or leave them.

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#1651142 - 01/13/12 03:58 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
Mrs. Rizzo Offline
10K Club

Registered: 03/07/06
Posts: 10385
Loc: Curled up by the fire...
Would your response be the same in a lender/broker situation specifically related to real estate transactions vs. a dealer situation?
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Take responsibility for your life.

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#1651165 - 01/13/12 04:36 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
These situations always need specific analysis. In many cases, in dealer paper, the dealer is the creditor and the bank is buying the paper. In real estate situations, that is not how it usually works. But everyone can be a little difference, as such a specific written agreement should be in place outlining each parties responsibilities.
_________________________
The opinions expressed are my own, take them or leave them.

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#1651207 - 01/13/12 05:51 PM Re: adverse action needed on broker loan request [Re: Chocaholic]
Mrs. Rizzo Offline
10K Club

Registered: 03/07/06
Posts: 10385
Loc: Curled up by the fire...
Gotcha! Thanks for your input!
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Take responsibility for your life.

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