We have a customer with a total indebtedness of $578,187
$378,373 – to purchase apartments and pay-off contract for deed and 199,814 – Purchase Primary Residence

Both loans have paid as agreed since origination in February and April 2013. The customer filed bankruptcy in 2004 due to failed partnership for which we have no details on. We have no information on borrowers’ experience in managing rental properties. They are applying to puchase more rental properties but management doesn't feel comfortable with the risk of extending more credit at this time.

Is this a valid reason for not extending additional credit. How do we convey this on an Notice of Action Taken? Any suggestions as to wording would be greatly appreciated.

Who cares how much anybody owes - what does the cash flow look like???

Management doesn't know how to underwrite credit? They base decisions on their "feel" based on what "they think" someone can afford???

If you don't make loans to someone that has declared bankruptcy in the last ten years - fine - say that.

If the current properties have not matured yet (not enough rental history) and you require two years of rental history, then say that.

Otherwise - stick to your credit underwriting policies.