If an institution has a credit underwriting policy which states that no new loans will be approved to consumers with a prior bankrucptcy - is this permissable as long as the bank follows the policy with strict underwriting oversight?

Are there any other consumer protection laws i should be concerned with?

Ouch. Why that strict? Doesn't your FI believe in second chances? We follow FNMA guidelines which require four years from release.

We have always in the past - but our Chairman wants this changed.

From what i've read this is not prohibited - just cautioned to be careful due to REG B. We have an underwriting dept which would ensure this was followed.

D&C, we were doing a Q & A with a consumer loan department, and asked the question how long would you wait until someone in bankruptcy would be given a loan. We started with the newest underwriter and worked to the manager.

The newest said 7 years. The time grew progressively less with experience, until it was the manager's turn. He mentioned there were three elements involved.

o Was the bankruptcy the fault of the customer, or were they a victim? (Was it their mismanagement of funds, or an unforeseen emergency such as medical with no insurance.)
o Did the bank lose any money in the bankruptcy?
o Did they re-establish any credit?

If all three criteria were OK, he said 1 year was enough for him.

Also, because of the differences in experience and underwriting, we came up with a 2nd review worksheet to endure that all parties would receive the same consideration. The bankrupt person whose application went to the newest underwriter would have the same consideration as that going to the manager. Basically, underwriters have loan approval authority and loan denial recommendation authority.

Be careful using bankruptcy as the only reason for denial.

From 202.1(b)...The purpose of this regulation is to promote the availability of credit to all creditworthy applicants without regard to . . . . or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.

thanks for all the input.