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#1693530 - 04/27/12 07:25 PM Two co-borrowers - one approved, one declined
cricket Offline
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Application is received by LO for a loan request from two individuals. Loan is approved for one of the applicants only. A new application is taken for the applicant approved. Is this a counter-offer to the original request? Or, is a adverse action sent to the applicant declined the request and a memo put with the adverse action stating that the co-borrower's request was approved and that indicates why there is not an adverse action to that individual?

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#1693616 - 04/27/12 11:59 PM Re: Two co-borrowers - one approved, one declined cricket
Rocky P Offline
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Florida
What I'm thinking you said -
The joint application (two people applying together) was denied and the AAN's need to be sent to both.

The better qualified applicant reapplied individually and that request was approved.
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#1693701 - 04/30/12 01:20 PM Re: Two co-borrowers - one approved, one declined cricket
cricket Offline
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Thank you for your reply.

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#1693725 - 04/30/12 02:05 PM Re: Two co-borrowers - one approved, one declined cricket
Dan Persfull Online
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The applicant that accepted the counteroffer would not need an AAN. The one that was denied would.
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#1694078 - 04/30/12 09:43 PM Re: Two co-borrowers - one approved, one declined cricket
Eldon96 Offline
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Further question just to keep my nuances straight...

If the denied applicant was denied for a reason NOT associated with a credit report (let's say they have poor history with us and we didn't need a credit report to tell us that), would an AAN still be required? Under Reg B a counter offer was made and accepted and FCRA doesn't apply.

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#1694079 - 04/30/12 09:44 PM Re: Two co-borrowers - one approved, one declined cricket
rlcarey Offline
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You still denied them credit.
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#1694084 - 04/30/12 10:10 PM Re: Two co-borrowers - one approved, one declined cricket
Eldon96 Offline
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True. But when dealing with multiple applicants, Reg B says you only have to notify one, preferrably the primary. And if you close the loan with the primary, you've notified them that the application was approved by closing the loan.

I have several scenarios running around in my head that may the question applicable. But I suppose the end result is that it's not hard to send an AAN, so why argue about it.

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#1694087 - 04/30/12 10:45 PM Re: Two co-borrowers - one approved, one declined cricket
rlcarey Offline
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Galveston, TX
But you denied one co-applicant. How is making a loan to the other co-applicant not a denial of credit to the one that didn't receive the loan? I would not even consider this a grey area.
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#1694126 - 05/01/12 12:24 PM Re: Two co-borrowers - one approved, one declined Eldon96
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Originally Posted By: Eldon96
True. But when dealing with multiple applicants, Reg B says you only have to notify one, preferrably the primary. And if you close the loan with the primary, you've notified them that the application was approved by closing the loan.

I have several scenarios running around in my head that may the question applicable. But I suppose the end result is that it's not hard to send an AAN, so why argue about it.


You would not have issued adverse action to the applicant who was denied. You would only have notified the one who was approved. They did not have the same outcome so how can one notice serve?

Additionally, put the regulation aside and consider common courtesy. How would you feel if you were totally ignored by a bank and received no notice whatsoever. There is reputation risk in being rude.
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#1694161 - 05/01/12 01:38 PM Re: Two co-borrowers - one approved, one declined cricket
Dan Persfull Online
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But I suppose the end result is that it's not hard to send an AAN, so why argue about it.

I don't mean to be rude but this is not a healthy attitude to take when dealing with regulatory requirements. I would want to know why I am having to send the notice. Not just because it's easier to do then to research the requirements.

What you need to keep in mind is 1002.9 lays out the ground rules for the written notification requirements when AA is taken against a consumer applicant or applicants. It also outlines the notification requirements when the credit request is for business purposes.

I am assuming based on the post the counteroffer was made to and accepted verbally by the one applicant. Once they accepted there was no AA taken against this applicant therefore the AA notification requirements for this applicant went away. However, the other applicant was denied with no counter therefore AA was taken against this applicant and they are entitled to a written AAN under the regulation.

If on the other hand the counteroffer was provided in writing under the guidance found in 1002.9 to the primary applicant then I would opine differently. Once the written counteroffer was provided to the primary applicant outlining the terms of the counteroffer and the specific reasons the original request could not be approved then I would opine you met the notification requirements of 1002.9.


As you can see, depending how the counteroffer is handled, there are two solutions so it would have been better to "argue" (research) to find the correct answer or answers.
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