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#196563 - 06/03/04 05:04 PM Counteroffer
Anonymous
Unregistered

We are a wholesale lender, and our customers are brokers.

Many times we get applications from brokers that are not within guidelines. We call the brokers and explain why the loan cannot be approved, and they most often will tell us to change one or more of the terms so the loan can be approved. Some examples are having a larger down payment and changing the loan to value from 80% to 75%, or approving a 30-year loan instead of 15 years.

I know we are required to send an adverse action in the event we do not make the loan, but:
if we (verbally) communicate the counteroffer to the broker and
they (verbally) respond with a change in terms that we will make the loan, and
we make the loan

are we responsible for sending a denial/counteroffer to the broker for them to pass onto the applicant too?

Thank you.

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Lending Compliance
#196564 - 06/03/04 05:09 PM Re: Counteroffer
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
If a loan is made from the counteroffer, then no Adverse Action Notice is required.
_________________________
David Dickinson
http://www.bankerscompliance.com

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#196565 - 06/03/04 05:24 PM Re: Counteroffer
Suwannee Offline
Platinum Poster
Suwannee
Joined: Jun 2002
Posts: 641
Florida
David is correct. If the loan is made, then no adverse action notice is required. Although, it is very easy in a wholesale shop for these unwritten counteroffers to become forgotten. The applicant does not accept the counteroffer and the file is found four months later with no adverse action letter or counteroffer letter in the file. And, now you are in violation of ECOA. I used to see this every day in the wholesale shop I worked in. It is not any fun to have to go through several hundred (yes, I said several hundred)files that have just been sitting for months with no final action taken.

One thing I have never understood is that the counteroffer details have to be communicated to the broker. Why not just go ahead and issue an adverse action/counteroffer letter to the broker? If the loan never closes, you are still in compliance.

_________________________
When you lose, don't lose the lesson.

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#196566 - 06/03/04 06:45 PM Re: Counteroffer
Anonymous
Unregistered

If you're the lending institution working with the applicant, do you have to submit the counteroffer in writing? I've heard you can counter verbally, but if they decline, adverse action notice is required.

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