Is it okay if the Compliance Officer, who knows the lending underwriting policies, be the 2nd review person for denials? Compliance will get to review the notices for accuracy before mailing them to the applicants.

Denials are currently prepared in the credit department, then reviewed by Compliance and stored for retention after the notices have been sent to the customer, Is it okay if the compliance department started preparing the NOAT's and mailing them? Would regulators approve of this?
We are a 1.2B bank.

Thank you

It really depends on the nature of your compliance department. Most banks try to keep the compliance department out of day-to-day processes which allows them some independence. The regulators could care less unless it involves jeopardizing your independent audit functions. It is really a business decision as to what your compliance department does in your organization.

I'll go along with Randy 110%! My question is what is the purpose of the review?

If it's to see if a form is correctly filled out, as explained above. If you can develop a checklist and train someone to look at exact steps, it may make your job easier.

If the process also includes fair lending, a credit or credit review officer might be better. Although you know underwriting, unless you are actively in the loop, there could be similarly situated loans where a more experienced loan officer (with greater authoirity) made, or exceptions to policy where your application was denied but a less qualified borrower was approved. Those are the ones that sneak up on you, especially that with all the data reported via HMDA-LAR, the regulators can do an electronic fair llending review of your loans and you have no knowledge it's going on.

Before you agree to any arrangement that will consume the compliance department's time and budget, push for a budget adjustment (costs charged to theirs not yours.) Business managers and their dedicated support units LOVE to dump costs into the lap of central office support units. To be an accurate accounting for the other unit's profitability, all costs incurred by the business unit and delivery of its products should roll up under the business/product.

Thank you.
The second review is to make sure that the denial was based on policy and that we are consistent with all applicants. It will be only for consumer non-real estate applications. The underwriting is centralized, only one individual approves/denies applications with no exceptions made to policy. This would only be temporary until someone is hired in credit to replace the person that was doing it.
In the some areas, the compliance dept. is not fully independent; we do have external auditors that do reviews on all regulations.

The preparation of the denials in Compliance is to make sure that they are accurately prepared and timely mailed out.

Thank you

We are a smaller bank and our compliance department actually prints and mails the denials. It was noticed that many of our adverse actions were not in the customer files and not getting sent out like they were supposed too.