I have a question concerning a denial that was just sent to me.

Customer applies for a HELOC. Bank takes application and pulls a credit report. The loan officer completes underwriting and then finds out that the property being pledge as collateral has multiple houses on the land. The additional homes are used by the customer's father and brother, so they are not really rental properties. The loan officer speaks with our CCO and he informs her that we do not make HELOCs secured by collateral with multiple homes on the property and that she can not proceed with the loan. This is not listed in our written policy; however, I am not aware of any HELOCs that are secured by collateral with multiple homes on the property.

Here are my questions. Do we issue an adverse action notice? If so what would be the reason for denial? The customer qualifies in every other way.

Or since the bank does not offer this product is an AAN even necessary?

Or since the bank does not offer this product is an AAN even necessary?

You offer the product applied for, just not on the terms applied for, multiple homes.


Your denial reason would be "value or type of collateral not sufficient".

Makes sense.

Thank you Dan.