We allow our customers with 2nd mortgage home equity loans to request a loan modification of their interest rate to lower their rate and monthly payment. The note does not get replaced, just a modification of terms. Upon receipt of a request we do a review of their file including looking at present employment status, income and a review of a new credit report. We also charge a fee if the modification is approved.

If we decide not to approve the modification request, does this trigger an adverse action notice to our existing loan customer? I'm having a very difficult time finding an answer using my usual places where I research questions like this including Regulation B. Is there an obvious answer and I'm just flat out missing it?

I would think an AAN would be needed. It's an application and a decision is made by the creditor.

Although I would advocate providing the AAN I do not think by regulation one would be required. The requester has not applied for nor have they been denied credit.