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#912420 - 02/28/08 08:30 PM Is adverse action letter required?
Scot Keliher Offline
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Scot Keliher
Joined: Feb 2005
Posts: 19
Tennessee
Let's say there is a customer who is a dentist and he does $1.3 to $1.4 million in business each year. Because of the way that insurance companies pay him, his billable income is reduced to below a million dollars each year.

If we were to deny a request for credit and the officer is not wanting to send out an adverse action letter because he has already notified him personally. Does the regulation require the adverse action letter in a case like this?
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Lending Compliance
#912430 - 02/28/08 08:38 PM Re: Is adverse action letter required? Scot Keliher
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,617
Galveston, TX
Is this a consumer or business loan?
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#912434 - 02/28/08 08:42 PM Re: Is adverse action letter required? Scot Keliher
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,832
Bloomington, IN
Is the loan request a business purpose or a consumer purpose?

The Reg. looks to gross income reported in the preceding fical year, not billable income.

202.9(a)(1) for consumer. An AAN is required regardless what the loan officer wants.

202.9(a)(3) for business. The key is did you provide him the proper notice that he has the right to request the reasons for denial.
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#912446 - 02/28/08 08:48 PM Re: Is adverse action letter required? Dan Persfull
Scot Keliher Offline
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Scot Keliher
Joined: Feb 2005
Posts: 19
Tennessee
This loan is a business purpose loan.
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#914098 - 03/03/08 10:07 PM Re: Is adverse action letter required? Scot Keliher
NotALawyer Offline
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NotALawyer
Joined: Nov 2001
Posts: 455
in addition to what has already been posted, look to your institution's policies/procedures. You might receive criticism from your examiners if your policies/procedures do not match actual practice.

Just a thought.

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