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#2224626 - 10/29/19 02:09 PM Adverse Action Reason
mdog76 Offline
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Joined: Jan 2007
Posts: 645
If an applicant applies for an unsecured loan, I don't think its right for the bank to use "value or type of collateral" as a denial reason. Is there anything in that that could get us in trouble outside of just not sounding right?

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Lending Compliance
#2224627 - 10/29/19 02:18 PM Re: Adverse Action Reason mdog76
raitchjay Online
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Joined: Oct 2009
Posts: 8,874
OK
Potential fair lending problem, when you approve a white male with a 640 credit score for an unsecured loan and deny a single white female with a 640 score and tell her that she has insufficient collateral. Plus as you say, it just isn't accurate. You aren't denying the person because of insufficient collateral (they are applying for an unsecured loan and you DO make unsecured loans......you just won't make one to THEM). You need to (IMHO) tell them why you won't make THEM an unsecured loan. What part of your guidelines for unsecured loans aren't they meeting?
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#2224629 - 10/29/19 02:26 PM Re: Adverse Action Reason mdog76
mdog76 Offline
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Joined: Jan 2007
Posts: 645
I haven't seen the adverse action yet, but they also chose excessive obligations as well from what I'm told. Seems like I'd just stuck with excessive obligations especially if DTI was too high. I'll know more when I see it.
Last edited by mdog76; 10/29/19 02:27 PM.
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#2224634 - 10/29/19 02:49 PM Re: Adverse Action Reason mdog76
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,018
Bloomington, IN
If an applicant applied for unsecured credit then what collateral was being offered? There is no justification for denying an unsecured credit request for "value or type of collateral".

I was hired in 2001 due to an exam in 2000. One of the findings in that exam was denying unsecured credit requests for no collateral. New AANs had to be sent to the affected applicants.
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#2224647 - 10/29/19 03:41 PM Re: Adverse Action Reason mdog76
Rocky P Offline
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Joined: Jun 2003
Posts: 7,460
Florida
Some very old school loan officers were taught that the "signature" is the collateral. Things have changed in the past 40+ years though. There was NO collateral intended for the loan, so how could they say thee bank is not making it because of lack of collateral value?

A typical "One D Ten T" error - Translation - 1D10T
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