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#2227588 - 12/17/19 07:55 PM Is an adverse action letter owed?
Ishmael Offline
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In a consumer lending (non HMDA-reportable transactions) setting, if an applicant submits an application to be prequalified for a loan of, say, $5,000, and they're prequalified (or conditionally prequalified) for, say, $4,000, notified of that prequalification, and the creditor never hears back from them, are they owed an adverse action letter under Reg. B?

Context: for a denied prequalification request, we'd typically send an AAN. I'm trying to determine when 1002.9(e) comes into play:

"(e) Withdrawal of approved application. When an applicant submits an application and the parties contemplate that the applicant will inquire about its status, if the creditor approves the application and the applicant has not inquired within 30 days after applying, the creditor may treat the application as withdrawn and need not comply with paragraph (a)(1) of this section."

The counteroffer aspect of this scenario makes this look like "adverse action" as defined by 1002.2(c)(1)(i), but the approved/prequalified aspect makes it look like it could be considered withdrawn. There just doesn't seem to be a lot of commentary around 1002.9(e), whether in the Official Interpretations or in the consultant/law firm/compliance guide marginalia. Any thoughts much appreciated!

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#2227594 - 12/17/19 08:31 PM Re: Is an adverse action letter owed? Ishmael
rlcarey Online
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rlcarey
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They applied for $5,000 - you said $4,000. You denied their request for $5,000.
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#2227602 - 12/17/19 09:05 PM Re: Is an adverse action letter owed? Ishmael
Skittles Online
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I'm curious though, what is being prequalified?
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#2227631 - 12/18/19 02:16 PM Re: Is an adverse action letter owed? Skittles
Ishmael Offline
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Denied for $5K, but prequalified for $4K.

Thanks, Randy.

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#2227635 - 12/18/19 02:20 PM Re: Is an adverse action letter owed? Ishmael
rlcarey Online
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rlcarey
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Galveston, TX
I do have the same question as Skittles though - how can you have a preapproval program for a non-mortgage loan?
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#2227669 - 12/18/19 05:41 PM Re: Is an adverse action letter owed? Ishmael
Gertie Offline
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If the applicant agreed to the reduced loan amount of $4,000 (the counter offer) and went silent after the acceptance, we would consider that withdrawn due to no response from applicant.

If the applicant did not agree to the counter offer for a reduced loan amount, we would provide an adverse action notice based on the original terms for which he applied.

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