John Doe applied for a mortgage loan.Process includes checking OFAC and negative news sources. Negative news report shows Doe was jailed for fraud for 15 years (yes, it was fraud for lots of money). He served his sentence, however he was convicted of a crime and we would rather not open accounts with him in view of the type of crime. We know that we can tell him that we do not want to open a deposit account and not directly provide a reason, ie "you were in jail for 10 years for fraud". We are not sure, from a fair lending perspective, if we can do the same. I am asking "which box should we check as to the reason for the decline". The negative news info, of course, does not appear on a credit report.
Recommendations welcome.

Isn't there a box on your AAN that says something like "Our credit decision was based in whole or in part on information obtained from an affiliate or from an outside source other than a consumer reporting agency"?

Check this posting:

https://www.bankersonline.com/qa/struggling-how-decline-loan

I saw David's post. O.K. Now my people, rightly so, are asking how they can indicate "other source", for example, but not have to go into the details with them. We can't refer them to the credit bureau. We would have to tell them the decision was based on news information about them that indicated previous association with criminal activity. We would certainly document this well, for examiners. Sounds good?

Do you really think this applicant isn't going to know what the 'other source' might be?
Criminal records are public.
Alternatively you could CCAP the name and then you don't have to rely on the news source.

I'm curious. Did you just google the borrower? Do you pay for other or alternative reporting/credit information? Does someone just remember? Did they defraud the financial institution (or an insider) and get ballsy and apply for a loan?

Is any of this process different than what you normally do on an applicant?

My hubby is law enforcement, there are cases he is involved with that the local news gets wrong all the time. I know mug shots are mug shots and you get them sometimes even if a grand jury no bills you. How good is your source?

No goggle process. We are confident in our source. It is a BSA "mandated" negative news source/database. We have been using it for about 1.5 years. Normally, there are no matches, however there have been a couple lately. The info attests to the person's character.
The loan process is the same; the database is run at a different interval.
The individuals most certainly will know. We just want to properly document the process per regulatory reqs.

It is a BSA "mandated" negative news source/database.

What in the world does that mean? "Mandated" by whom? Using negative news sources for BSA investigation purposes is one thing - using it for credit decisions is a whole other ballgame.

It means that we were asked to have one, by our regulatory agency, as many banks have been asked to do.
We don't want people who were convicted for $$$ related fraud or drug dealing as bank customers. We have the right to not open a checking account. We should have the same right for a loan application.
How would you defend lending money to someone who was convicted of a serious crime and you knew this, through the negative new info?

"How would you defend lending money to someone who was convicted of a serious crime and you knew this, through the negative new info?"


I have a local judge under indictment for drunk driving. He's still sitting on the bench pending the case going to trial. It's a huge to-do locally, but we'd still make loans to him. It would depend on the crime I suppose. We also have convicted sex offenders as customers, but they conduct their accounts in an appropriate manner and they have a legal source of income. Again, if the sentence has been served, and there is no indication of current criminal activity - I don't see what the risk is going forward -- but I guess that's a risk your bank has determined not to have.

On the other hand, I have customers that have defrauded or stolen money or neglected to make good on private loan arrangements with my board members that we won't make loans to, and thankfully, they have enough reported bad credit that that's our given reason (bad credit) -- and these deadbeats don't have any criminal history and we won't lend to them.