Wording on Adverse Action Notice
by Dan Persfull & Andy Zavoina, BOL Gurus Guru BIOS
Question: On adverse action notices when co-applicants are involved, is it OK to put the co-applicant's reasons for denial in the "other" section of the applicant's notice and vice versa. Example...1st applicant is turned down for bad credit and length of time on job. Co-applicant has collections and high debt to income. Should the applicant's notice say that he/she was turned down for bad credit and length of time on job and under "other" he/she was turned down for co-applicant's collections issues and high debt to income ratio?
Answer - Dan: We put the following legend on the AAN:
A = Applicant
C = Co-applicant/Co-signer
We then check the appropriate reasons and put A, C, or A&C beside the reasons.
Answer - Andy: If your concern is one of privacy between the applicants, that isn't an issue. Changes to Reg. B were in the Federal Register, 03-18-03, Page 13151. In part it said, "Many commenters were concerned about the co-applicant’s or guarantor’s privacy when the reasons for adverse action pertaining to creditworthiness are given to the primary applicant. When a person agrees to be a co-applicant, guarantor, or similar party, however, there is (or should be) a general understanding that information will be shared. Accordingly, the rule has been adopted as proposed." Emphasis here is that the primary applicant be made aware of ALL the reasons for denial.
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