Hello,

We have a new online portal for commercial loans, and the portal requests GAR from borrowers. That said, if a borrower reports this amount, but we ultimately don't verify it or use it for underwriting, do we report the amount as over/under or "not known?"

I ask because the reg says we need to report the GAR we considered when extending credit. It also says we don't need to verify this data in order to report it. If the GAR is on the app as over/under, can we truly say we didn't consider it, even if we didn't underwrite?

Well, you either use it or you do not, it cannot be both.

That's where the confusion lies. The loan officer says they did not use revenue in decisioning, but the application requested this amount and the borrower provided it. If we didn't consider it, can we report it as unknown, even though we have the application which lists what the GAR is?

My concern is Regulator will look at the LAR, see it reported as unknown, but look at the application and see that it was provided there. Should we report the GAR that's on the application even though it wasn't used to underwrite?

Well, it comes down to your board approved written credit underwriting polices, does it not? A loan office does not get to say whether gross revenues are used or not used, can they? If you have individual officers making these sorts of decisions, then you have a huge fair lending risk. If your credit underwriting policies do not look at gross revenues - then take it off the application form.

If you don't report it, you are going to end up with a large % of loans that will be excluded from comparison to Aggregate Data. That could be a negative on your exam.
Look at PPP loans as an example, if a bank knew the revenue they were able to report it. But we all know revenue had nothing to do with approval of those loans. I was able to report revenue on some of mine, but still got the negative comment that my results fell well below demographics. There was an additional comment that said PPP contributed to this performance.
We have a program (board approved) that doesn't use revenue as part of the credit decisions, but I still have it captured and reported. The goal of reporting GAR is to be able to determine the % of loans done to businesses with revenues above or below $1,000,000. There is no tracking used about how that revenue pertains to your credit decision. (until we get to rule 1071...then WHO KNOWS! )

OK - I have to backtrack too. I just went by what the OP said, but where is this in the regulations?