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#1726198 - 08/01/12 09:16 PM Reg B Commercial Denials
JBanker28 Offline
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Joined: Apr 2006
Posts: 57
Kansas
1002.9(a)(3) - says that on business credit applicants you can give the statement of action orally. it also says that you must disclose the applicant's right to a statement of reasons (at application, if you want) and must disclose the ECOA notice.... But disclose how?

I've searched the InfoVault and found comflicting information - does the disclosure of statement of reasons and the ECOA notice need to be in writting / in a form the customer can keep? or can these disclosures also be oral?

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Lending Compliance
#1726203 - 08/01/12 09:19 PM Re: Reg B Commercial Denials JBanker28
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Why not just tell them why you denied the loan? What would you say: We can't approve this loan but we won't tell you why unless you ask? Banks tend to discuss why the deal won't work with commercial customers.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1726209 - 08/01/12 09:27 PM Re: Reg B Commercial Denials JBanker28
JBanker28 Offline
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Joined: Apr 2006
Posts: 57
Kansas
I'm sure our officers would tell them why when the tell them they are denied. It would be silly not to. But the way the regulation reads, I don't know if the reasons (or the right to know the reasons) must be in writing.

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#1726211 - 08/01/12 09:28 PM Re: Reg B Commercial Denials JBanker28
Kathleen O. Blanchard Offline

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No it does not. Make a note in the file of the denial and the reasons why the deal does not work.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1726216 - 08/01/12 09:33 PM Re: Reg B Commercial Denials JBanker28
JBanker28 Offline
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Joined: Apr 2006
Posts: 57
Kansas
ECOA notice too? Can be verbal?

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#1726228 - 08/01/12 09:48 PM Re: Reg B Commercial Denials JBanker28
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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If they ask for it, it must be given in writing, but you do not have to give any notice about rights to receive.

Business (Corporation, Partnership, LLC, Sole Proprietor, etc)

Gross revenues of more than $1MM

Notification may be written or oral.
Written notice must be within a "reasonable" amount of time after the completed application is received.
Oral notice must be given within a "reasonable" amount of time after the completed application is received.
The bank must provide the applicant with a written statement of the reasons if requested in writing by the applicant within 60 days.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1726700 - 08/02/12 06:52 PM Re: Reg B Commercial Denials JBanker28
JBanker28 Offline
Member
Joined: Apr 2006
Posts: 57
Kansas
Yes, I completely understand that everything may be verbal for a business with gross revenues of more than $1MM.

My question is specifically for businesses with gross revenues of less than $1MM.

1002.9(a)(3)(i) says that for these small business customers (A)statement of action taken may be given orally or in writing, when adverse action is taken and (B) disclosure of an applicants right to a statement of reasons may be given at the time of application, instead of when adverse action is taken, provided the disclosure contains the information required by paragraph (a)(2)(ii) of this section (right to statement of specific reasons) and the ECOA notice specified in paragraph (b)(1) of this section.

Further it states that if the application is made solely by phone, the action taken AND the right to a statement of reasons may be made orally...so....if it's NOT an application made solely by phone, does this mean paper disclosure is required?

Sorry...

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#1726708 - 08/02/12 07:02 PM Re: Reg B Commercial Denials JBanker28
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Because you were focusing so much on verbal, I thought you were interested in businesses with revenue > $1 million. Sorry.

For those with revenue of $1 million or less the rules differ and are more like consumer:

(a)(3) Notification to business credit applicants. For business credit, a creditor shall comply with the notification requirements of this section in the following manner:

(i) With regard to a business that had gross revenues of $1 million or less in its preceding fiscal year (other than an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit), a creditor shall comply with paragraphs (a)(1) and (2) of this section, except that:

(A) The statement of the action taken may be given orally or in writing, when adverse action is taken; CAN BE VERBAL

(B) Disclosure of an applicant's right to a statement of reasons may be given at the time of application, instead of when adverse action is taken, provided the disclosure contains the information required by paragraph (a)(2)(ii) of this section and the ECOA notice specified in paragraph (b)(1) of this section; MUST BE WRITTEN UNLESS APPLICATION IS ENTIRELY BY TELEPHONE, BUT CAN BE AT TIME OF APPLICATION, SUCH AS ON AN APPLICATION FORM, OR ON A SEPARATE FORM HANDED OUT.

(C) For an application made entirely by telephone, a creditor satisfies the requirements of paragraph (a)(3)(i) of this section by an oral statement of the action taken and of the applicant's right to a statement of reasons for adverse action.



(a)(1) and (2) referenced above state the following and you must comply verbally or in writing (so you have 30 days to comply on the small businesses, but that can be verbal or written, unlike consumer which must be written):

(a) Notification of action taken, ECOA notice, and statement of specific reasons. (1) When notification is required. A creditor shall notify an applicant of action taken within:

(i) 30 days after receiving a completed application concerning the creditor's approval of, counteroffer to, or adverse action on the application;

(ii) 30 days after taking adverse action on an incomplete application, unless notice is provided in accordance with paragraph (c) of this section;
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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