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#1817848 - 05/28/13 07:00 PM
Late Adverse Action Notice
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100 Club
Joined: Mar 2005
Posts: 200
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What is everyone doing to avoid a late adverse action notice when the appraisal is not received for 6-7 weeks and does not come back in line with the loan amount - so a decline has to be issued but the 30 day period has expired?
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#1817931 - 05/28/13 08:33 PM
Re: Late Adverse Action Notice
Kathleen O. Blanchard
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Power Poster
Joined: Jun 2003
Posts: 7,650
Florida
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CA, in light of Kathleen's post, read the definitions of Application and Completed Application in the reg and commentary. They are different.
Regulation: (f) Application means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested. The term application does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit. A completed application means an application in connection with which a creditor has received all the information that the creditor regularly obtains and considers in evaluating applications for the amount and type of credit requested (including, but not limited to, credit reports, any additional information requested from the applicant, and any approvals or reports by governmental agencies or other persons that are necessary to guarantee, insure, or provide security for the credit or collateral). The creditor shall exercise reasonable diligence in obtaining such information.
Commentary 6. Completed application—diligence requirement. The regulation defines a completed application in terms that give a creditor the latitude to establish its own information requirements. Nevertheless, the creditor must act with reasonable diligence to collect information needed to complete the application. For example, the creditor should request information from third parties, such as a credit report, promptly after receiving the application. If additional information is needed from the applicant, such as an address or a telephone number to verify employment, the creditor should contact the applicant promptly. (But see comment 9(a)(1)–3, which discusses the creditor's option to deny an application on the basis of incompleteness.)
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#1830875 - 07/08/13 05:29 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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[i]I will be the first to admit that I have struggled a bit with this definition and building appropriate procedures.
What are other FI doing with regards to when they do and do not consider the request to be a "completed application". Currently my mortgage sub is required to send...
AA Notices on declined PreQuals
Notice of Incomplete on incomplete files (i.e. not enough info to make a decision)
What can I consider as "other information" in order to cut back on the number of files we have to disposition each month?
Additionally, what happens to those files that are not deemed to be "applications" if they are on our LOS system? Should we flag them as "non app"?
Much thanks![/i]
Last edited by Garret01; 07/08/13 05:30 PM.
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CRCM
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#1830891 - 07/08/13 05:46 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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Thanks Kaybee. So, if a customer were to apply with an application containing name/SS/Income/signature and credit was pulled...
If my policy/procedure stated that the application is not considered complete until we obtain a signed 4506-T...
then I could avoid having to send out a notice of incomplete or adverse action because I didn't have a complete application? Is Reg B concerned with the fact that I have enough information to render a credit decision?
A very loaded question I know, but I appreciate your time/input.
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.
CRCM
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#1830898 - 07/08/13 05:54 PM
Re: Late Adverse Action Notice
Compliance Audit
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Platinum Poster
Joined: Mar 2012
Posts: 574
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I agree with KB. We send notice of incomplete application with no approval or denial. We list those items needed to make a determination on the loan. We give applicant 10 days to respond or inquiry is cancelled.
Last edited by hgliii; 07/08/13 05:54 PM.
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#1830901 - 07/08/13 06:10 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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Thank you both. So, either way I am still sending out a NOI to all who apply.
The benefit is that I'm not having to produce/audit the AA notice because the application was never deemed "complete".
Now this would all be out the window if I received all 6 items for a RESPA application; correct? Or can I apply the 4506-T as the 7th item for RESPA?
Does this sound accurate?
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.
CRCM
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#1830904 - 07/08/13 06:13 PM
Re: Late Adverse Action Notice
Compliance Audit
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Platinum Poster
Joined: Mar 2012
Posts: 574
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Yes. But somewhere in back of my mind, I remember hearing that the #7 any other info required by lender was eliminated. I am getting old and may be confused on that part.
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#1830913 - 07/08/13 06:18 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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Wow. Thanks so much for your help. This is going to drastically reduce the number of AA we are sending out for the mortgage sub. Do you often hear of regulators criticizing FI's for what they choose as their "other information" (4506-T in my case) or is it pretty flexible?
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Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.
CRCM
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#1830935 - 07/08/13 06:27 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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I misspoke Kaybee. I meant to say that this will reduce the tracking of applications.
Can I apply the 6 items required under RESPA to dictate what is and is not a FAIR LENDING application?
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.
CRCM
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#1830981 - 07/08/13 07:01 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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Thank you Kaybee.
KPOC: I'm starting to understand now.
So I guess I will modify some procedures to say that an application (Reg B) is not complete until I have received a paystub. If by, let's say, day 10 we do not have a paystub we send out a NOIA. If we never hear back then the file is dead/incomplete.
Thanks again to both of you.
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.
CRCM
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#1831009 - 07/08/13 07:35 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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Gotcha. Thank you so much. There was a lot of dialogue here and I appreciate your patience.
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.
CRCM
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#1831044 - 07/08/13 08:42 PM
Re: Late Adverse Action Notice
Compliance Audit
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Diamond Poster
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
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I hate to beat this thing to death but if someone is willing to share a sample of their application policy it would be greatly appreciated. I'm now struggling with how precise/vague to be with the policy. I'm also wrestling with the RESPA prohibition against REQUIRING verification documents prior to issuing a GFE. http://www.bankersonline.com/forum/ubbth...rue#Post1815119So, my theory of requiring a paystub/bank statement as a component of a completed ECOA application kind of goes out the window. How could I argue that I don't require verification docs for RESPA if I require them for ECOA?
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.
CRCM
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