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#606720 - 08/29/06 09:11 PM ADVERSE ACTION
Annmarie1 Offline
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Joined: Jun 2006
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Does anyone know the rules for writing up an Adverse Action on a Company? I heard that you only have to do an adverse action if you deny a loan to a company whose net worth is under $1million.

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Lending Compliance
#606721 - 08/29/06 09:17 PM Re: ADVERSE ACTION
rlcarey Online
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rlcarey
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Galveston, TX
Refer to Reg B - click "read a reg" above and read 202.9.
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#606722 - 08/29/06 09:19 PM Re: ADVERSE ACTION
Annmarie1 Offline
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Thanks!

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#606723 - 08/30/06 03:43 AM Re: ADVERSE ACTION
homestar Offline
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US of A
Here's a link to a short, but sweet FAQ summary of the business adverse action rules on another website. Take a look at the first question.

ECOA & Reg B Adverse Action
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#606724 - 08/30/06 03:00 PM Re: ADVERSE ACTION
Nanwa Offline
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Nanwa
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Clintonville, WI, USA
Who gives the adverse action notice in the case of referrals? For example, a consumer goes to a company called Quick Loan, who in turn contacts our bank to see if we would want to make the loan. We look at it and say no. So Quick Loan contacts other banks until they can find a bank to make the loan. Who sends the ad act notice?
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#606725 - 08/30/06 03:05 PM Re: ADVERSE ACTION
homestar Offline
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Nanwa, if I had an arrangement like this, I would tell the bank to send it's own adverse action notice. Regulation B let's you rely upon the referring party to provide the notice, but then you have other hoops to jump through. It's just easier and safer to do it yourself.

BTW, are you talking about an indirect loan relationship or a brokered loan relationship?
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#606726 - 08/30/06 04:21 PM Re: ADVERSE ACTION
Nanwa Offline
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Nanwa
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Clintonville, WI, USA
Brokered.
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#606727 - 08/30/06 05:20 PM Re: ADVERSE ACTION
Dan Persfull Offline
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Bloomington, IN
Nanwa, review to 202.9(g) and its Commentary. This section addresses notification requirements for applications presented by a third party.
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#606728 - 08/30/06 05:43 PM Re: ADVERSE ACTION
Nanwa Offline
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Nanwa
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Clintonville, WI, USA
Thanx Dan. I read the sectrion three times; legalese is so hard to interpret. I will check with my man upstairs to see what type of notice the third party is giving, to make sure we are disclosed.
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#606729 - 08/30/06 05:55 PM Re: ADVERSE ACTION
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
If you can document that the applicant accepted credit from another creditor then no AAN is required. If you can not then I would advise that you send the AAN, or make sure you have a written agreement with Quick Loan for them to provide the appropriate notice. IMO it would be simpler and the safest for you to provide the AAN to insure your FI is covered.
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The opinions expressed are mine and they are not to be taken as legal advice.

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