For an online application process, is it acceptable to provide an error message to a borrower when they don't meet minimum program requirements instead of sending a denial? So if the minimum loan amount is $5,000 and they are applying for a $1,000, can we just give them a message that says "loan amount does not meet requirement." Or if the borrower lives outside our lending area, can we provide a message that says "we cannot make loans to California residents." Or, do we have to send a denial notice telling the borrower they don't qualify? I'm getting some pushback from the compliance officer and I can't find it spelled out that a denial is required. Thank you.

The amount of a loan is a term.

Paragraph 2(c)(2)(v).

1. Terms of credit versus type of credit offered. When an applicant applies for credit and the creditor does not offer the credit terms requested by the applicant (for example, the interest rate, length of maturity, collateral, or amount of downpayment), a denial of the application for that reason is adverse action (unless the creditor makes a counteroffer that is accepted by the applicant) and the applicant is entitled to notification under §1002.9.

As far as geography, a wrong zip code should stop the application process from ever happening.

On a similar note, what if we don't make loans to non-US citizens. Would it require a denial notice if someone indicated they weren't a US-citizen and we can't make the loan?

Residency status would be a term (requirement) of the loan, not a product.

Paragraph 6(b)(7)

1. National origin—immigration status. The applicant's immigration status and ties to the community (such as employment and continued residence in the area) could have a bearing on a creditor's ability to obtain repayment. Accordingly, the creditor may consider immigration status and differentiate, for example, between a noncitizen who is a long-time resident with permanent resident status and a noncitizen who is temporarily in this country on a student visa.

2. National origin—citizenship. A denial of credit on the ground that an applicant is not a United States citizen is not per se discrimination based on national origin.