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#1941831 - 07/16/14 08:44 PM Borrower name change approved not accepted
Kisha Offline
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We have a scenario in which two individuals applied for a business loan to buy an investment property (1-4 family residence). Loan officer collected GMI and we approved the loan. Before closing, the borrowers decided they wanted the loan in their business name instead of personal names. Should we have started a new application in the business name and coded the first one as approved not accepted?

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#1941836 - 07/16/14 08:51 PM Re: Borrower name change approved not accepted Kisha
swiggles Offline
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swiggles
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My opinion.......would just document the file as to what happened and report it in the business name.

Someone will probably shoot me down.

That's what I like about BOL....you get informed really quickly when you're wrong. :o)
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The more you sweat in training, the less you bleed in battle.......

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#1941857 - 07/16/14 09:23 PM Re: Borrower name change approved not accepted Kisha
Truffle Royale Offline

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ditto swiggles.
There...I shot down your theory about getting shot down.
smirk

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#1941863 - 07/16/14 09:30 PM Re: Borrower name change approved not accepted Truffle Royale
swiggles Offline
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swiggles
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Originally Posted By: Truffle Royale
ditto swiggles.
There...I shot down your theory about getting shot down.
smirk
Ha! Thanks Truff. I feel so warm and fuzzy now. wink
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The more you sweat in training, the less you bleed in battle.......

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#1943135 - 07/18/14 07:33 PM Re: Borrower name change approved not accepted Kisha
Kisha Offline
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Joined: Feb 2011
Posts: 232
I was leaning towards documenting the file as well, but I am getting push back that this wouldn't be enough of a defense if questioned.

Would there be anything in the Reg to help me out with this topic? I know GIR says use Approved not Accepted when applicant fails to respond to your notification of approval or your commitment letter within specified time.

Obviously if a borrower specifically states they don't want the loan you would use this code if HMDA reportable, but in this particular situation the borrower did accept our loan terms, for the most part. How much does the borrower name play a part of those loan "terms"?

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#1943142 - 07/18/14 07:38 PM Re: Borrower name change approved not accepted Kisha
3up3down Offline
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Joined: Jun 2008
Posts: 25
I also have a similar question. We approved an individual borrower for a home purchase loan. However, 1 week before the loan was set to close she lost her job and therefore would have no repayment ability. In order for her to still be able to purchase the property her parents decided to employ her on their family farm and they also wanted to be joint owners on the property and also be on the loan. Can I just report the final outcome for HMDA purposes or do I need to report the earlier scenario?

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#1943299 - 07/19/14 05:58 PM Re: Borrower name change approved not accepted Kisha
Truffle Royale Offline

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Kisha, who is pushing you back and what are they offering as the basis for their objection?
I don't see any way at all that this could be coded approved but not accepted. The borrowers never made any indication that they wouldn't accept the loan you approved.
The only option you might have employed was to withdraw (prior to underwriting) or deny the application when the borrowers decided to switch to their business.

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#1943300 - 07/19/14 06:01 PM Re: Borrower name change approved not accepted Kisha
Truffle Royale Offline

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3up3down, your situation is quite different. In order for the parents to be on the loan, you had to do a new application and qualify them as borrowers AND as their daughter's employer. I would have denied the loan based on the daughter's inability to pay. Then I would have taken a new application on all the borrowers and proceeded from there. I would have reported two scenarios for HMDA.

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#1944185 - 07/22/14 05:54 PM Re: Borrower name change approved not accepted Truffle Royale
3up3down Offline
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Joined: Jun 2008
Posts: 25
We were going to do that, but we had compliance examiners here at the time and we ran the scenario past them. They said it was not necessary to treat it as a new application and have to send new early disclosures etc. since the terms were the same and we were just adding borrowers. They said it would be fine to just note the change and send a copy of the disclosures to the parents. However, when I spoke to them I failed to ask their opinion on the HMDA entry.
Now, I do understand that the next set of examiners may have a different opinion...

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