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#66133 - 03/07/03 04:37 PM declining a consumer loan
Pale Rider Offline
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We don't like to do home equity lending because of the weird nature of these loans in Texas. A non-customer has applied, has stellar credit, fits all other parameters for approval of a consumer loan. We will accomodate our good customers with a home equity loan in rare instances. Can we decline this loan opportunity ? And what would be the adverse action reason ? I apologize if this is a silly question, it is 70 degrees and sunny, its payday and its Friday and my mind is not on the job.
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#66134 - 03/07/03 04:45 PM Re: declining a consumer loan
Andy_Z Offline
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You can't say you don't offer that product, because you do. I assume there are no possibilities of discriminatory allegations here.

I believe that if you can make a profit, you do the deal and you do it right. You might ask for the other business of the person, tell them you want at least a DDA and you can price your loan according to risk and your desire for the credit. But I'd personally hate to refuse a good loan.

FYI, weather is the same in Killeen. Mid-70s later, possibly up to 80 and not a cloud in the sky.
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#66135 - 03/07/03 04:52 PM Re: declining a consumer loan
Lestie G Offline

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I think you might have a tough time defending the denial of this one. If you never made the nasty things, then you could deny based on not offering the product requested. Since you have been known to make them, though - that kind of rules that one out.

Have you evaluated the collateral? How about the first lien amount? Maybe you'll luck out and they'll have a big first or a low-value property!
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#66136 - 03/07/03 04:55 PM Re: declining a consumer loan
Pale Rider Offline
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Thanks Andy, the lenders were going to ask for her other business (which they tell me is substantial). I know of no discrminatory elements in this deal, but that isn't to say she could not claim one or two of the protected classes. I am with you, we offer the product out to the public, she applies and meets the underwriting standards, so we can't pass the business up because we are afraid of the HEL product and this person isn't a current customer. Thanks very much.
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#66137 - 03/07/03 04:58 PM Re: declining a consumer loan
Pale Rider Offline
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She has a huge first but the amount requested and the first are below 80% loan to value, which is the standard in Texas. I think the lenders are stuck and the litigation risk outweighs the credit risk. Thanks vey much for the input.
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#66138 - 03/07/03 05:10 PM Re: declining a consumer loan
Andy_Z Offline
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Forget the litigation risk at this point and focus on the income and profitability of the loan. We are here to make money. This is not a rare loan product anymore. Get a good attorney and take your time.

Make a buck, satisfy a new customer and develop a new relationship.
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#66139 - 03/07/03 09:23 PM Re: declining a consumer loan
Dolly Nugent Offline
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The original poster said that they only make equitylines to customers. Could they decline it because the applicant does not have an account?
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#66140 - 03/07/03 11:24 PM Re: declining a consumer loan
Andy_Z Offline
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Not an equity line, an equity loan. And part of the suggestion was to ask for additional business.

If they do not have a policy requiring deposit accounts, I would be hard pressed to say they should have that requirement for some products and not others and there was no indication of that. They just don't like the detailed work that has to go into one of these loans and as a result do them rarely and only for better customers.
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AndyZ CRCM
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Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#66141 - 03/08/03 05:15 PM Re: declining a consumer loan
Wyogirl Offline
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Laramie, WY. USA
Go for it Burback! We used to be ascared of HELOCs as well, but that was before we had a compliance officer, (namely, me). Immerse yourself, become an expert, decide on a product, prepare early disclosures, train and you'll not only be fine, your HELOC stress level will go way down.

It takes a little time, but its worth it. We don't shy away anymore, we market HELOCs and they are quickly becoming a great money maker. Consumers are looking for ways to consolidate debt and deduct the interest. Get on the wave and ride.

Good Luck!

Wyogirl

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#66142 - 03/10/03 03:27 PM Re: declining a consumer loan
Lestie G Offline

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Quote:

Go for it Burback! We used to be ascared of HELOCs as well, but that was before we had a compliance officer, (namely, me).




Oh, if only! HELOC's are illegal in Texas. The only type of home equity lending we can do is complicated, and the law is written into the Texas constitution. No regulatory authority has been given the go ahead to write regulations, so the law in the constitution is all we have, until the courts interpret something.

It is getting much better, but being the guinea pig in developing some case law is not high on anyone's wish list!
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