kblanchard: Maybe this will help?
An adverse action notice must be sent to an applicant when a credit request is declined. In your hypo, the Bank never dealt w/an "applicant". It dealt w/a potential lender (its "affiliate") that wanted it to buy the paper after-the fact. The Bank did not decline to extend credit to the "applicant" because it never recv'd a request from the applicant to do so. Therefore, the Bank need not provide an adverse action notice to the applicant.
The only way I see that the Bank would need to provide the adverse action notice is based upon the "affiliate" relationship you reference in your hypo.
Does the "affiliate" shop all of its deals to the Bank or also to other lenders?
If the "affiliate" only shops deals to the Bank (and declines to extend credit if the Bank wont buy the paper after-the-fact), this looks like the Bank and the "affiliate" are basically one and the same (ie. if the Bank wont buy the deal the "affiliate" automatically turns it down; how is this different from the Bank simply refusing to do the deal directly?).
As to the section of HMDA that you mention, it says, basically, that if the Bank decided not to buy the paper after-the-fact because of an independent review of the creditworthiness of the applicant, then it has taken adverse action against the applicant.
In other words, although the actual application was given to someone other than the Bank (ie. the "affiliate"), the Bank accepted and acted upon the application. The fact that the application came from a 3rd party and not directly from the applicant doesnt change the fact that adverse action on the application was taken by the Bank. As such, the Bank must provide the adverse action notice.
Therefore, it seems the answer to your question depends upon why the Bank decided not to buy the paper after-the fact. Was it based upon an independent review of the creditworthiness of the applicant (adverse action notice reqrd) or some other reason (possibly no notice reqrd)?
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