We have an application in which we gave a conditional approval. Then credit expired and we pulled a new credit report which has additional debt, so the loan no longer qualifies. An adverse action notice denying the the loan for DTI was not sent until 60 days after receiving the new credit report. There is debate about whether this is a Reg B timing violation. One camp says no because an original decision was communicated within 30 days of receiving a completed application. The other camp says yes because we should have re-decisioned within 30 days of receiving the new information. Thoughts?

When did the conditional approval offer expire? But regardless, you had information in your hands for 60 days prior to notification of denial. That exceeds the timing window for notification.

I agree with Randy. You knew the decision changed from a "yes" to a "no"; you cannot wait 60 days to provide the AA.

Our Compliance Department would consider this a Reg B Violation. We have 30 days from the date of application to make a decision on information known. Later, if information changed and the decision went from a "yes" to a "no", we would have 30 days from the date we knew we couldn't move forward to either resolve the issue or provide a denial.

We were questioned by examiners on a similar situation. They questioned us because the AA was not provided within 30 days of application. We explained we had pre-approved based on information known within 30 days of application. Later in the process the information changed and we now had a "no". We had documentation of when we received the changed information & provided an AA within 30 days of the new information being known. I don't think they would have bought into a later date.

Thanks for the responses. I agree that once the new information was received to change the decision, it needed to be communicated within 30 days, just trying to support that with information in Reg B given the argument that the timing was already met in (i). Ultimately it seems the application became incomplete again when we needed additional information.

(a) Notification of action taken, ECOA notice, and statement of specific reasons. (1) When notification is required. A creditor shall notify an applicant of action taken within:

(i) 30 days after receiving a completed application concerning the creditor's approval of, counteroffer to, or adverse action on the application;

(ii) 30 days after taking adverse action on an incomplete application, unless notice is provided in accordance with paragraph (c) of this section;

(iii) 30 days after taking adverse action on an existing account; or

(iv) 90 days after notifying the applicant of a counteroffer if the applicant does not expressly accept or use the credit offered.

Then credit expired and we pulled a new credit report which has additional debt, so the loan no longer qualifies.

What was your permissible purpose under the FCRA for pulling a new credit report once the conditional approval expired?

1. You violated Reg. B because you basically rescinded the conditional approval based on the new information and did not notify the consumer within the allotted time of the adverse action, or
2. You violated the FCRA for pulling a new credit report without a permissible purpose.