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?

"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.

"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).