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#617600 - 09/25/06 08:22 PM Notice to home loan applicants & brokers
donnac Offline
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Joined: Feb 2003
Posts: 624
I understand that if a broker submits an application to the bank & the bank pulls a new credit bureau, that the bank needs to send a notice to home loan applicant. Some of our people are concerned that the applicant will be receiving these letters from numerous banks that the broker submitted the application to. In addition, I've been told that the brokers don't like the banks to send anything directly to the applicants. The brokers like to have everything "funneled" thru them so that the applicant doesn't realize how many banks are looking at their application. In addition, I've been told that the brokers don't want the banks to send anything directly to the applicants for fear that the applicant will go directly to the bank & cut out the broker.

I've been asked if FACT Act has a "carve out" provision like Reg B does for sending the adverse action notice back to the broker & then relying on the broker to send out the AA if the applicant is not approved at any bank. I'm not aware of a provision in the FACT Act that says we can send the notice back to the broker & rely on the broker to send out the notice. I don't have enough faith that the broker will send out the notice to home loan applicants from all the banks.

For those of you with broker relationships, do you send the notice directly to the applicant or do you send it back to the broker & hope they send it to the applicant?

Thanks.

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#617601 - 09/25/06 08:43 PM Re: Notice to home loan applicants & brokers
ACBbank Online
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ACBbank
Joined: Jul 2006
Posts: 4,344
New York City
All notices and disclosures go directly to the client. Brokers do not dictate how we do business. I have yet to meet an examiner who will accept the answer " I sent the disclosure to the Broker." If the broker is not agreeable to these terms, you may want to discontinue the business relationship.
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"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

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#617602 - 09/27/06 02:37 PM Re: Notice to home loan applicants & brokers
donnac Offline
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Joined: Feb 2003
Posts: 624
Thanks for your response & I agree with you. My challenge will be convincing our lenders! Does everyone else also send the notice directly to the borrower & not to the broker?

Thanks.

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#617603 - 09/27/06 04:04 PM Re: Notice to home loan applicants & brokers
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
We don't deal with brokers and from some of the things I read in the threads I'm darn glad we don't.

Does the broker pull a credit report and provide the NHLA disclosure before sending the transaction to you? If they do then I would rely on 1681g(g)(1)(E)(v). If they do not then you must disclose according to the requirements of 1681g(1).
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The opinions expressed are mine and they are not to be taken as legal advice.

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#617604 - 10/02/06 01:30 PM Re: Notice to home loan applicants & brokers
donnac Offline
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Joined: Feb 2003
Posts: 624
Thanks for the regulatory cite. Now that I've read that section, I have a follow-up question.

Assuming the broker sends the notice (a big assumption), should the bank still send the notice because of the potential that the credit score on the report that the bank pulled being different than the credit score that the broker pulled? I understand that the scores can be different based on the credit bureau used.

Thanks.

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#617605 - 10/02/06 01:56 PM Re: Notice to home loan applicants & brokers
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Not IMO, as long as you know the broker provided the notice, but again I don't deal with brokers.

For our const/perm loans we always update the credit report before it goes to perm to insure nothing has substantially changed in the borrower's financial condition. We do not provide a new NHLA in those instances.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#617606 - 10/02/06 02:34 PM Re: Notice to home loan applicants & brokers
ACBbank Online
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ACBbank
Joined: Jul 2006
Posts: 4,344
New York City
Just a follow up to Dan's point, how can the bank show the examiner that broker did in fact provide the notice? While I agree with Dan, I just don't have faith in brokers doing due diligence and always send disclosures/notification to borrower directly.
_________________________
"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

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