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#2183389 - 06/27/18 08:58 PM PreQualification and Adverse Action
BAY Offline
100 Club
Joined: Jan 2006
Posts: 147
The Bank has a Prequalification program. We run credit and DU. When DU returns an approval, we provide a Prequalification letter identifying the parameters of the Prequal along with the conditions. When DU returns a referral, we provide a different letter that informs the client that based on the limited information provided at this time, we are unable to render a decision and we invite the client to complete a full application. Although the DU referral may have been generated because of a lower credit score, the Bank offers numerous products via secondary market, some with lower credit score criteria and because the Bank makes exceptions, we thought this was a reasonable option. So the question came up, instead of sending the letter that says we cannot make a decision at this time due to limited information, should be instead be sending an AAN. Both letters were drafted by outside Legal Counsel who has historically been very diligent about identifying regulatory requirements and they did not tell us to provide AAN....what are your thoughts.

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Lending Compliance
#2183440 - 06/28/18 01:40 PM Re: PreQualification and Adverse Action BAY
k8e Offline
100 Club
Joined: Sep 2012
Posts: 131
You've received an application. I think it is fine for you to send a letter stating more information is needed, but if the member declines to provide it, then an AAN is required because you have enough information to decline the request for credit.

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#2183443 - 06/28/18 01:50 PM Re: PreQualification and Adverse Action BAY
BAY Offline
100 Club
Joined: Jan 2006
Posts: 147
So...if we initially give the letter that says we do not have enough information and we invite you to complete a full application - if we never hear from the customer again, should we follow up with a formal Denied for Incompleteness within 30 days of the PreQual Request.

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#2183457 - 06/28/18 02:10 PM Re: PreQualification and Adverse Action BAY
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
if we initially give the letter that says we do not have enough information and we invite you to complete a full application . . . . should we follow up with a formal Denied for Incompleteness

Based on the information you have provided in your post you are telling the borrower you can't make the loan based on the information they have provided so your options are to provide an AAN for an incomplete application or provide a Notice of Incompleteness under the guidelines of 1002.9(c)(2).
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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