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#2244116 - 10/15/20 07:40 PM Partial application and Reg B
Rebecca W. Offline
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Our written policy has that an application is complete if it has the 6 pieces of information needed for disclosures. If a partial application is still a TBD for an address and the credit score is run and does not meet guidelines and is denied does the 30 days to send a denial letter for Reg B come in to play?

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#2244125 - 10/15/20 09:17 PM Re: Partial application and Reg B Rebecca W.
John Burnett Offline
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Yes. When the bank determined it could not make the loan, the incomplete application became a completed application under Regulation B and you have to provide the adverse action notice within thirty days of that decision. The reason for the denial won't be that the application was incomplete. It will be whatever shortcomings fed the low credit score.
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#2244149 - 10/16/20 02:57 PM Re: Partial application and Reg B Rebecca W.
Inherent_Risk Offline
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I agree with John on what needs to be done, but I don't think the application became complete. It just became an application. Regardless of how you define your application "if in giving information to the consumer the creditor also evaluates information about the consumer, decides to decline the request, and communicates this to the consumer, the creditor has treated the inquiry or prequalification request as an application and must then comply with the notification requirements under § 1002.9." 1002.2(f)-Comment 3

I know this is done a lot out there, but how is the 6 TRID pieces of information a completed application?

"A completed application means an application in connection with which a creditor has received all the information that the creditor regularly obtains and considers in evaluating applications for the amount and type of credit requested (including, but not limited to, credit reports, any additional information requested from the applicant, and any approvals or reports by governmental agencies or other persons that are necessary to guarantee, insure, or provide security for the credit or collateral)."

Application =/= Completed application. They are different.
Last edited by Inherent_Risk; 10/16/20 02:59 PM.
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#2244167 - 10/16/20 05:50 PM Re: Partial application and Reg B Rebecca W.
Rocky P Offline
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In simple terms, an application is a request for credit "Reg B".
A completed application is everything that the creditor needs to make a decision. It is a rolling concept.

Like mentioned, it could be something with the request - something on the application that does not meet the lending criteria. If credit is next, the creditor pulls a report. If the credit report does not meet the lender's criteria, the creditor has a completed application - everything they need to make a decision. If it does meet the criteria, go to the next step - collateral, ability to repay, etc. every step of the way is another to meet the definition of a completed application. When the creditor has all the information needed to deny or approve a loan, they have a completed application. (IMHO)
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#2244216 - 10/19/20 12:47 AM Re: Partial application and Reg B Rocky P
Inherent_Risk Offline
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Originally Posted by Rocky P
In simple terms, an application is a request for credit "Reg B".
A completed application is everything that the creditor needs to make a decision. It is a rolling concept.

Like mentioned, it could be something with the request - something on the application that does not meet the lending criteria. If credit is next, the creditor pulls a report. If the credit report does not meet the lender's criteria, the creditor has a completed application - everything they need to make a decision. If it does meet the criteria, go to the next step - collateral, ability to repay, etc. every step of the way is another to meet the definition of a completed application. When the creditor has all the information needed to deny or approve a loan, they have a completed application. (IMHO)

It’s not everything the creditor needs to make a decision though. It’s “ALL the information that the creditor regularly obtains and considers in evaluating applications...” In my opinion, just because you have enough information to deny an application, doesn’t make it complete. It just means you are able to take adverse action on an incomplete application.

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#2245380 - 11/10/20 06:33 PM Re: Partial application and Reg B Inherent_Risk
Jkeyes Offline
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I just came across this thread and I need some clarification. Even though the application is not complete according to the regulation of a complete application, you would still send an adverse action based on the credit findings. You would not adverse it because of being incomplete. Correct?

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#2245391 - 11/10/20 08:06 PM Re: Partial application and Reg B Rebecca W.
Rocky P Offline
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A complete application is defined as an application with enough information for the creditor to make a decision. It can be on a napkin,on the back of the golf scorecard, or on a written bank application.

A complete application does not mean a piece of paper filled out in it’s entirety!
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#2245393 - 11/10/20 08:16 PM Re: Partial application and Reg B Rebecca W.
John Burnett Offline
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A complete application includes all the information the creditor regularly needs to make the underwriting decision on the application. When the creditor makes the decision to decline the application based on the credit report, the creditor, by definition, has enough information to make the decision, and the application, again by definition, becomes a completed application. That triggers your 30-day deadline for the notice of adverse action.
Last edited by John Burnett; 11/10/20 08:51 PM. Reason: wording tweaked
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#2245396 - 11/10/20 08:51 PM Re: Partial application and Reg B Rebecca W.
Inherent_Risk Offline
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I don't see how an incomplete application becomes complete just because you have enough information to deny it. If you regularly obtain and and consider x, y, and z in evaluating an application, and you only have x, then I don't see how you have a complete application even if x is enough for you to deny the application. Is that stated somewhere I'm missing?

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#2245399 - 11/10/20 09:08 PM Re: Partial application and Reg B Rebecca W.
John Burnett Offline
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It doesn't say that, actually. What it does, in 1002.9(a)(1)(i), is say that you have 30 days from receipt of a completed application to notify the applicant.

But, in 1002.9(a)(1)(ii) it says you have 30 days to notify the applicant of adverse action taken on an incomplete application, unless you have used the special notice of incompleteness with a deadline date for providing the missing information that is described in 1002.9(c).

But you can take adverse action on an incomplete application for reasons other than incompleteness. For example, you can pull credit and deny the request based on the credit report or credit score before you have all the info you would expect for a completed application. At that point, you have pulled the 30-day trigger under 1002.9(a)(1)(ii).

I always found it helpful to think that the "completed" switch is activated when the adverse decision is made on an incomplete application, but that's not the way the regulation gets to the same pulling of the trigger. Thanks for the challenge on that, IR.

In effect, the application is as complete as it's going to get, since you have determined to deny it.
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#2245418 - 11/12/20 02:07 AM Re: Partial application and Reg B Rebecca W.
David Dickinson Offline
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John's right. If you can say "yes" or "no", you have a completed application. Why? Because the Commentary to §1002.2(f)#3 states:

3. When an inquiry or prequalification request becomes an application. A creditor is encouraged to provide consumers with information about loan terms. However, if in giving information to the consumer the creditor also evaluates information about the consumer, decides to decline the request, and communicates this to the consumer, the creditor has treated the inquiry or prequalification request as an application and must then comply with the notification requirements under §1002.9. Whether the inquiry or prequalification request becomes an application depends on how the creditor responds to the consumer, not on what the consumer says or asks. (See comment 9–5 for further discussion of prequalification requests; see comment 2(f)–5 for a discussion of preapproval requests.)

IOW, if you can say "No", you have an application regardless of how much (or little) information you have collected.
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#2245428 - 11/12/20 03:34 PM Re: Partial application and Reg B Rebecca W.
Inherent_Risk Offline
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Not to split hairs, but I think it's an important hair to split. That says an inquiry becomes an application, not a completed application. If you deny an inquiry, it becomes an incomplete application that you have taken adverse action on, and you have to notify them under 1002.9(a)(1)(ii). I do not believe it is a completed application.

Quote
IOW, if you can say "No", you have an application regardless of how much (or little) information you have collected.

Importantly, I believe it's not if you CAN say no, but rather if you DO say no. I read that to say the clock starts if/when you say no, not when you get the information.

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