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#760939 - 06/26/07 04:21 PM Denied or withdrawn?
Lissa P. Offline
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Joined: Oct 2003
Posts: 474
Texas, USA
We were unable to grant credit to an applicant on a HMDA reportable application because of legal issues dealing with ownership of the propety. I know that this transaction does not qualify as "adverse action" under Reg B, but how should we report it on the HMDA LAR? I'm having difficulty finding this issue addressed under Reg C.

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#761068 - 06/26/07 05:20 PM Re: Denied or withdrawn? Lissa P.
hmdagal Offline
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hmdagal
Joined: Dec 2002
Posts: 3,841
I'm not a Reg B expert, but here we would turn it turn for collateral value (because we're not able to perfect a lien on the property) and report it as a denial for HMDA.

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#761090 - 06/26/07 05:30 PM Re: Denied or withdrawn? hmdagal
sue's mom Offline
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sue's mom
Joined: Feb 2003
Posts: 455
IL
I would agree with hmdagal.

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#761135 - 06/26/07 05:43 PM Re: Denied or withdrawn? sue's mom
Lissa P. Offline
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Joined: Oct 2003
Posts: 474
Texas, USA
Thanks.......

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#761161 - 06/26/07 05:51 PM Re: Denied or withdrawn? Lissa P.
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
I don't think that the proper denial reason is "collateral value" under the Reg. B specificity rules. The denial had nothing to do with the value of the collateral. It had to do with the title. A more appropriate reason would be "unable to obtain a enforceable lien".

Even the commentary to the model Reg B forms state:

The sample forms are illustrative and may not be appropriate for all creditors. They were designed to include some of the factors that creditors most commonly consider. If a creditor chooses to use the checklist of reasons provided in one of the sample forms in this appendix and if reasons commonly used by the creditor are not provided on the form, the creditor should modify the checklist by substituting or adding their reasons.

If the reasons listed on the forms are not the factors actually used, a creditor will not satisfy the notice requirement by simply checking the closest identifiable factor listed.
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#761641 - 06/26/07 08:45 PM Re: Denied or withdrawn? rlcarey
biz Offline
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Joined: Nov 2005
Posts: 1,032
Midwest
Would you not have approved the application subject to clear title? And if later you find that your borrower can't get such, would you not have an approved, not accepted? Didn't the loan get approved, subject to certain conditions-clear title. (I just hate to see a borrower "denied" a loan (as do most of them hate to see it), when the circumstances for the denial, are likely not in their control-isn't there something else?)

Just a thought but isn't the appraisal value subject to marketable title? And if there isn't such, isn't the value of the property diminished?

Only way to learn is to ask the stupid questions . . .that's where I come in.

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#761802 - 06/26/07 10:37 PM Re: Denied or withdrawn? biz
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Approved subject to conditions is not approved. If conditions are not met, the application is denied - no way around that.

While the appraisal may say that, the fact of the matter is not that the collateral does not have sufficient value - it really is a title issue.

The reason for denial is suppose to allow the applicant to clear the specific reason. If you tell them that the collateral value is insufficient - it is not really the reason. If this person could clear the title - then they would be good to go.
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#761914 - 06/27/07 12:34 PM Re: Denied or withdrawn? rlcarey
biz Offline
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Joined: Nov 2005
Posts: 1,032
Midwest
Thanks again for explaining

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