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#1662940 - 02/09/12 07:59 PM Adverse Action - Reason for Denial
BankerChic24 Offline
Junior Member
Joined: Jul 2011
Posts: 45
My bank recently sent out an adverse action to a co-applicant with a 792 credit score. The only denial reason given was "primary applicant did not qualify". Most likely the co-applicant on their own would have qualified, but the lender did not feel good about the transaction. Is this a good enough reason to the co-applicant, or could this potentially get us in trouble?
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Lending Compliance
#1662969 - 02/09/12 08:38 PM Re: Adverse Action - Reason for Denial BankerChic24
rlcarey Offline
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Joined: Jul 2001
Posts: 79,617
Galveston, TX
"primary applicant did not qualify" does not meet the specificity requirements of Regulation B. Both applicants should receive the same reasons listed on their AANs.
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#1662998 - 02/09/12 09:13 PM Re: Adverse Action - Reason for Denial BankerChic24
Rocky P Online
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Joined: Jun 2003
Posts: 7,420
"Lender did not feel good about the transaction?" BC, there has to be something in the bank's underwriting guidelines other than that explanation from the LO. If I was the co-borrower, I'd be on the phone with the bank, or send a complaint letter to the regulator.

Like Randy mentioned, the regulation has some guidance in the appendix on the reason for denials. Not following that (especially if it is a HMDA loan and the bank reports reasons for denial) will have an examiner looking at the file. I've only seen "other" a few times in my career.

I can see several issues, including the lack of a 2nd review before the AAN was sent. Make sure that the guidelines have something to cover similar transactions, especially a counteroffer if the co-applicant could have individually qualified. Based on the post, your LO did a disservice to the bank and customer - banks do not make money on turndowns (or friends on a TD that could have been made).
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