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#1429820 - 08/16/10 08:53 PM
Re: NonMarried Applicants
xerx
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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Short answer yes. The loan officer is treating non-married joint applicants differently than married applicants. Doesn't matter if their credit is "co-mingled" or not.
Also search the threads on joint credit reports. You will find some recent discussion where the FDIC is writing up banks for Reg B violations for pulling and charging two credit reports on non-married applicants vs pulling and charging a joint credit report for married applicants.
Last edited by Dan Persfull; 08/16/10 08:54 PM.
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#1429828 - 08/16/10 08:59 PM
Re: NonMarried Applicants
Dan Persfull
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Power Poster
Joined: Oct 2009
Posts: 3,927
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Agreed. Although we were okay, an examiner did tell us that the FDIC was paying close attention to this very issue.
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I hear and I forget. I see and I remember. I do and I understand.--Confucius
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#1429836 - 08/16/10 09:10 PM
Re: NonMarried Applicants
xerx
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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Do you have married joint applicants fill out separate 1003s?
If not then, regardless if the applicants brothers, sisters, co-habitors, etc., you are treating non-marred applicants differently based on their marital status. One of the prohibited factors found in ECOA and Reg B.
A search on this topic will bring up many post that have addressed this issue over the years.
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#1429869 - 08/16/10 10:56 PM
Re: NonMarried Applicants
xerx
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100 Club
Joined: Jul 2010
Posts: 226
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Last edited by xerx; 08/16/10 11:22 PM.
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#1429870 - 08/16/10 11:42 PM
Re: NonMarried Applicants
xerx
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Joined: Jul 2010
Posts: 226
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#1434456 - 08/26/10 01:22 PM
Re: NonMarried Applicants
xerx
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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I, like Fannie and Freddie, can put any statement on the application I wish too however that doesn't make it compliant with the Regulation.
If you are charging them for individual credit reports vs joint credit reports you are going to run afoul with your examiners, especially if they are FDIC.
Search the threads over the last few months on "joint credit reports".
Also if you have a denial in this situation the reasons must be specific. From the 2004 changes to Reg B.
9(b) Form of ECOA notice and statement of specific reasons 9(b)(2) Statement of specific reasons
Section 202.9(b)(2), adopted as proposed, clarifies that whether a creditor’s denial of credit is based on the creditworthiness of the applicant, a joint applicant, or guarantor, the reasons for adverse action must be specific. For example, a general statement that “the guarantor did not meet the creditor’s standards of creditworthiness” is insufficient.
The legislative history of the requirement to provide specific reasons for adverse action indicates that the purposes of the disclosure are to help achieve the antidiscrimination goals of the ECOA and to educate and inform consumers. These dual purposes are served by the clarification in § 202.9(b)(2). For example, the disclosure may discourage a creditor from discriminating based on a co-applicant’s or guarantor’s race, sex, age, or other prohibited basis. Also, the disclosure may help educate and inform applicants, co-applicants, or guarantors as to reasons for denial that are not apparent from looking at their credit report.
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.
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#1434740 - 08/26/10 05:18 PM
Re: NonMarried Applicants
xerx
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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My underwriter said we if apply for "joint credit reports" on people who do not have commingled assets and liabilities, he thinks there may be issues with selling the mortgage in the secondary market We have been pulling joint reports on joint applicants whether married or not for years, even before all the recent fuss came about. We have yet had a loan refused to be purchased because of it and we have yet to be cited by any quality audit. What has to be realized is in the last 18 months or so the regulatory environment is drastically changing. What was "overlooked" 3 or 4 years ago will most likely be more closely scrutinized in the very near future. The recent fuss over the joint reports is one sign of those changes coming (looking more closely at how FIs treat unmarried applicants vs married applicants) and coming sooner than later. Those that aren't willing to make the adjustments are those that will later pay the penalties.
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#1435662 - 08/27/10 06:03 PM
Re: NonMarried Applicants
xerx
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Georgia Plum
Unregistered
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Embrace the change, embrace the change
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#1520778 - 03/11/11 06:12 PM
Re: NonMarried Applicants
Dan Persfull
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Member
Joined: Jun 2010
Posts: 96
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My underwriter said we if apply for "joint credit reports" on people who do not have commingled assets and liabilities, he thinks there may be issues with selling the mortgage in the secondary market We have been pulling joint reports on joint applicants whether married or not for years, even before all the recent fuss came about. We have yet had a loan refused to be purchased because of it and we have yet to be cited by any quality audit. What has to be realized is in the last 18 months or so the regulatory environment is drastically changing. What was "overlooked" 3 or 4 years ago will most likely be more closely scrutinized in the very near future. The recent fuss over the joint reports is one sign of those changes coming (looking more closely at how FIs treat unmarried applicants vs married applicants) and coming sooner than later. Those that aren't willing to make the adjustments are those that will later pay the penalties. I apologize if this has been discussed, but I read through this thread and have one additional clarification question- When married couples apply, they are pulled jointly and have commingled Debt to Income ratios and credit. In order to treat boyfriend/GF and engaged couples the same, our bank takes the same approach. But, what if a father/son apply, is it a requirement to combine their credit and DTIs? What about if the father just wants to cosign? Is this essentially what Reg B means by not treating unmarrieds differently? I may not be thinking about this correctly, but I am even more confused after reading through this. Thanks
Last edited by villenbe; 03/11/11 06:13 PM.
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#1520831 - 03/11/11 07:10 PM
Re: NonMarried Applicants
villenbe
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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If the father and son are applying for joint credit then you must treat them as you would any other joint applicants.
The father applying as a co-signer is not the same as applying for joint credit. In this case we analyze the father's individual ability to repay the loan. If he does not have the capacity to pay the loan then he would not be worth much as co-signer if the son quit paying.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1520845 - 03/11/11 07:20 PM
Re: NonMarried Applicants
Dan Persfull
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Member
Joined: Jun 2010
Posts: 96
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Thank you, that clears it up for me.
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#2125352 - 04/06/17 07:16 PM
Re: NonMarried Applicants
xerx
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Diamond Poster
Joined: Oct 2015
Posts: 1,668
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Just to add to this "older" topic. I was at an FDIC Bank where prior to my arrival they had a finding related to treating unmarried applicants differently because of a different price point for married joint credit reports vs. unmarried. So, this issue was still being kicked around as recent as 2014.
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#2125386 - 04/06/17 10:10 PM
Re: NonMarried Applicants
xerx
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10K Club
Joined: Oct 2000
Posts: 10,179
Toano, VA
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Thanks for sharing this, Justin. You may be saving someone a big headache.
There are countless possibilities for what might be questioned as credit discrimination. Trying to figure it out on your own is like stumbling around the back yard in the dark looking for a rake.
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