When we have two applicants and one applicant does not qualify but the other applicant would qualify if they applied with another applicant that had "healthy" credit, is it appropriate to give that applicant that would qualify a combined decline/counteroffer that states something like this "We were unable to offer you credit on the terms that you requested, but can offer you credit on the following terms: $XXX,XXX loan to purchase primary residence without current co-applicant, with the addition of a qualified co-borrower."

Should we be counteroffering that we can offer credit with the addition of a qualified co-applicant? Is this OK under ECOA?

Next Question...

Since this is currently being done at this FI, even if the applicant and new co-applicant fill out a new application, would you consider it a continuation of the original application (and document this fact) for HMDA reporting? So if the loan is originated we report the original application date and if it ends up being ultimately declined for other reasons or is withdrawn, then we report the original application date and original decline date?

Thanks in advance.