If a commercial loan is due payable on demand is a adverse action notice when this feature is used?

I would think that it would but it is only following through with the original terms of the note so I am unsure.

Normally I think this would be when the customer is in default but it could be based on collateral value which I think would be adverse action. What do you think? Would providing the right to a statement of reasons at the time of original application cover us still?

(c) Adverse action. (1) The term means:

(ii) A termination of an account or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor's accounts; or


You are terminating the account, I'm not sure how it would not be a AA but since we do not use demand features I will defer to someone that may have had to deal with this in the past.

Since this is a commercial loan can we rely on the statement of reasons provided at application and notify them verbally?

Yes, this is treated as adverse action as you are "calling" the note, demanding payment.

Since this is a commercial loan can we rely on the statement of reasons provided at application and notify them verbally to meet the REG B notification requirements?

No. That statement is for the sole purpose of the loan request being denied at the time of application. It would not be valid for subsequent AA taken after the loan closed.

That makes sense thanks.