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#2256674 - 07/14/21 03:53 PM Adverse Action
Anonymous Offline
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Joined: Jun 2021
Posts: 187
Is it wrong to send a denial letter when the applicant clearly decided not to continue with the loan? (email stating I wish to hold off on going any further) We already sent out the LE and the appraisal was conducted. We even charged her for the appraisal and credit report.

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Lending Compliance
#2256675 - 07/14/21 03:54 PM Re: Adverse Action Anonymous
raitchjay Online
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Joined: Oct 2009
Posts: 9,088
OK
Sounds like they withdrew, in which case there's no application left to deny.
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#2256676 - 07/14/21 03:59 PM Re: Adverse Action Anonymous
Anonymous Offline
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Joined: Jun 2021
Posts: 187
Exactly! Is it a violation or just tacky?

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#2256678 - 07/14/21 04:20 PM Re: Adverse Action Anonymous
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
What reason are you giving them for denying the loan?
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#2256682 - 07/14/21 04:40 PM Re: Adverse Action Anonymous
Anonymous Offline
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Joined: Jun 2021
Posts: 187
Oh that's the wonderful thing, nothing is listed frown

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#2256684 - 07/14/21 04:58 PM Re: Adverse Action Anonymous
Adam Witmer Offline
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Joined: Sep 2010
Posts: 2,658
Originally Posted by dmk124
Exactly! Is it a violation or just tacky?
It's probably more tacky than a violation, but if you are auditing it, this would be a good training opportunity to bring this up.

Technically, Reg B doesn't say you can't send a Notice of Action Taken when the application is expressly withdrawn. In fact, the commentary says you are "not required" to send the NAT, but doesn't say you can't:

"2. Expressly withdrawn applications. When an applicant expressly withdraws a credit application, the creditor is not required to comply with the notification requirements under §1002.9."

That said, you could have a violation if they put something on the NAT (like a denial reason) that wasn't true.

Again, this is probably a good opportunity for training.
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Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2256703 - 07/14/21 06:59 PM Re: Adverse Action Anonymous
Anonymous Offline
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Joined: Jun 2021
Posts: 187
Thank you!!

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#2256716 - 07/14/21 09:06 PM Re: Adverse Action Anonymous
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
It might be a reasonable practice to send a NAT to acknowledge that the applicant withdrew the application and the bank has placed it on file.
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BankersOnline.com
Fighting for Compliance since 1976
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#2256725 - 07/15/21 11:59 AM Re: Adverse Action Anonymous
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
I don't disagree and always encouraged my clients to send a letter, but not an adverse action notice. The letter said something like: We received your request to withdraw your application on xx/xx/xx. If this is not correct or you wish to reactivate this application in the future, please contact us at:

This is especially important if your NAT leaves the consumer the impression that the application has been denied. Many consumers think that when you have credit denied, it hurts their credit report. Not a far stretch to a UDAAP by the regulators.
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