Skip to content
GeoDataVision
Thread Options
#2238309 - 06/18/20 04:56 PM Inform Borrower that Deferral Could Impact Credit?
Larry Offline
Member
Joined: Feb 2016
Posts: 91
Are you doing anything to inform borrowers that obtaining a loan deferral could possibly impact their ability to be approved for future credit you or from other lenders?

Since the CARES Act requires that loans in deferral must not be reported as delinquent, many borrowers are assuming that the deferral won't show up on their credit report at all. Then they're surprised and upset when they're denied for credit afterward, especially for something like a refinance to lower their mortgage payment. There could be a potential UDAAP concern if the borrower isn't provided with this information.

Thank you,

Return to Top
Lending Compliance
#2238311 - 06/18/20 05:14 PM Re: Inform Borrower that Deferral Could Impact Credit? Larry
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
Why is it a UDAAP if a borrower makes a request and you agree to it?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2238314 - 06/18/20 06:26 PM Re: Inform Borrower that Deferral Could Impact Credit? Larry
Larry Offline
Member
Joined: Feb 2016
Posts: 91
The potential for UDAAP could occur if we don't inform the borrower of the possible negative impact of getting a deferral on their loan.

One outcome could occur if a lender a0pproves a deferral on a loan then the borrower applies with the same lender to refinance their mortgage to reduce their monthly payment but they're denied based on their deferral with the same lender. They could possibly have a valid concern that they would not have taken the temporary deferral if they knew they would be denied on the refi and the lender failed to provide this relevant information.

Another outcome would be if they get a deferral from one lender then they're denied on an application with another lender because of the deferral shown on their credit report.

Return to Top
#2238318 - 06/18/20 06:51 PM Re: Inform Borrower that Deferral Could Impact Credit? Larry
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
I still fail to see the UDAAP in that. If that was the case, then if getting a car loan would put them over the DTI limit for a mortgage loan they were planning to get next week - would you warn them?

They ask for a deferral and you grant it.

Now if they asked you what the impact might be on their credit and you told then : "ah - don't worry about it", then you would have a problem.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top

Moderator:  Andy_Z