1002.2(c) Adverse action. (1) The term means:

(i) A refusal to grant credit in substantially the amount or on substantially the terms requested in an application unless the creditor makes a counteroffer (to grant credit in a different amount or on other terms) and the applicant uses or expressly accepts the credit offered;

What does "substantially" mean in the context of the definition within Regulation B? Say, for example, a customer applies for a 4% rate. They don't qualify for it, but do qualify for a 5.5% rate. Does that become a counteroffer? I could argue that the 5.5% is on substantially the same terms as the 4% originally requested. Seems very subjective.

Substantially's definition can be found with a Google search. It's use in the above cite wouldn't vary from those definitions.

4% vs. 5.5% on a $10,000 loan over 5 years the borrower would have to pay roughly an additional $400 in finance charges or a 39% increase.

I'm not sure an argument that a 38% increase in the rate and a 39% increase in the charges are on substantially the same terms applied for at the 4% rate would hold up.

Thanks Dan.