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#4876 - 09/24/01 03:39 PM 23A Loan Request Question
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
I am looking for others opinions of how they would handle these situations regarding loans to pay off debt at a non-bank affiliate, which are 23A transactions.

First situation: If a request for an application for a loan for this purpose is rec'd and we have no room under the statutory limit, and we advise that we cannot accept the application because we cannot make any of those kinds of loans at present, I am thinking that this is akin to a turn down for "policy reasons", meaning it is not truly "adverse action".

Second situation: If after an application has been rec'd and is in process, we find out the funds are going to be used to payoff debt at the non-bank affiliate, how would you code the treatment of the application - I am concerned about calling it a decline or withdrawal when it is not truly either. We are saying, now that we know what funds are for, we can't continue with this application.

These are mortgages, so it is usually impractical for the client to pledge collateral that would take the loan out from under 23A coverage.

Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy

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General Discussion
#4877 - 09/24/01 06:03 PM Re: 23A Loan Request Question

I think you are really dealing with eligibility for a loan program as opposed to making a credit decision on an accepted application. In the first case, you never accepted an application since it was not eligible, In the second case, although it was being processed, you've made no credit decision although you mistakenly have begun to process the application. If you define an accepted application as one that must meet all eligibilty requirements, including 23A requirements, then you might be ok if your process would handle all ineligible applications the same once discovered in the process. I would make that an express requirement for an application to be considered "accepted".

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