I have a couple of situations that we have questions about: Note: Our Mortgage Department does not issue combined counteroffer/denial letters. Situation A: Two individuals apply for a loan. One has bad credit. The other one's looks good. LO states can't be approved as is and suggests the one with good credit apply individually. Should this be handled: 1) By denying the loan to the two applicants, sending adverse action notices, and requiring the one applicant to apply again OR 2) As a counteroffer. Only if the offer is rejected would an adverse action notice be sent. If the counteroffer is accepted, the application and LE would be revised and processed. Then, through processing the loan, if the loan is denied, an adverse action notice would be sent. Situation B: One individual applies for a loan. Doesn't qualify. LO suggests applicant bring in a co-borrower. Application will be amended to add co-applicant. If applicant doesn't bring co-borrower, application is denied. Should this be handled: 1) By denying the loan to the one applicant, sending an adverse action notice and requiring the two individuals to apply OR 2) As a counteroffer. If the counteroffer isn't accepted, a denial notice would be sent to the applicant. If accepted, the application and LE would be revised to include the co-applicant and processed. Thanks for your help!

A. The applicant being denied would need an AAN under Reg. B. The applicant accepting the verbal counteroffer would not need an AAN. For HMDA you only need to report the origination. Whether you require them (the applicant accepting the verbal counteroffer) to reapply or just amend the application would be an internal decision.

B. Inviting someone to reapply with a co-applicant/borrower/signer is not a counteroffer. You are not offering them credit on different terms. You are merely inviting them to reapply on different terms. Big difference IMO. We send the applicant the AAN and inform them they are welcomed to reapply with a co-applicant but we in no way imply they will be approved if they do.

Thanks for your response.