We have an existing business purpose loan where the guarantor is a trust and the trustor has passed. Our borrower is receiving pressure from other "family" members to have the trust released as a guarantor to that other matters may be settled. We are not willing to release the trust as a guarantor. The borrower has now submitted an application and other financial documentation for a potential "replacement guarantor". We are not willing to accept the proposed replacement guarantor as they do not posses the financial capacity to do so. Must I send an adverse action notice to the proposed replacement guarantor?

You have a request for credit and you are denying that request. An AAN is required.

So the AAN would be sent to my existing borrower denying the proposed new guarantor

Yes

Thank you