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#2135153 - 06/21/17 03:42 PM Notice of Incomplete
banker-12 Offline
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Is a written Notice of Incomplete required for a commercial loan with revenues > $1 million? Can the officer document the file with phone calls or emails sent to the customer requesting the needed information? Can it be done verbally?

thanks,

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Lending Compliance
#2135392 - 06/22/17 04:02 PM Re: Notice of Incomplete banker-12
David Dickinson Offline
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Central City, NE
There's no difference between the NOI requirements for consumer vs. non-consumer applications. Notification can be verbal or by email (it's a very common practice), BUT if the applicant doesn't provide the requested information, either a denial (for incomplete application) or a NOI must be sent. You can find this here:
At its option, a creditor may inform the applicant orally of the need for additional information. If the application remains incomplete, the creditor shall send a notice in accordance with paragraph (c)(1) of this section (an adverse action notice). [§1002.9(c)(3)]

These might also be helpful:
When an application is incomplete regarding information that the applicant can provide and the creditor lacks sufficient data for a credit decision, the creditor may deny the application giving as the reason for denial that the application is incomplete. The creditor has the option, alternatively, of providing a notice of incompleteness under §1002.9(c). [Commentary to §1002.9(a)(1)#3]

IOW, you can deny the application because it's incomplete. OR you can send an NOI (as described below):

If additional information is needed from an applicant, the creditor shall send a written notice to the applicant specifying the information needed, designating a reasonable period of time for the applicant to provide the information and informing the applicant that failure to provide the information requested will result in no further consideration being given to the application. The creditor shall have no further obligation under this section if the applicant fails to respond within the designated time period. If the applicant supplies the requested information within the designated time period, the creditor shall take action on the application and notify the applicant in accordance with paragraph (a) of this section. [§1002.9(c)(2)]

I always like to say "everyone gets a piece of paper". Either you make them a loan, send them a denial, send them a counter-offer/denial, or send them a notice of incompleteness. The only exceptions are applications that are expressly withdrawn [Commentary to §1002.9 #2] or they are approved and the applicant never comes back [§1002.9(e)].
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#2135482 - 06/22/17 09:07 PM Re: Notice of Incomplete banker-12
banker-12 Offline
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Posts: 1,240
Thank You. Our commercial lenders are not sending the Notice of Incomplete; they verbally request it and document the file or keep the emails. the loan gets approved but does not originate.

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#2135540 - 06/23/17 02:10 PM Re: Notice of Incomplete banker-12
Truffle Royale Offline

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Quote:
the loan gets approved but does not originate
Then how is that an incomplete?

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#2135552 - 06/23/17 02:40 PM Re: Notice of Incomplete banker-12
banker-12 Offline
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The approval is more than 30 days from the application date; unable to make a credit decision because items were pending. The only documentation in the file are the notes/emails from the officer requesting the information. The decision was made from the date the items were received and approved but later cancelled by the borrower.

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#2135561 - 06/23/17 03:04 PM Re: Notice of Incomplete banker-12
JC (Darth HMDA) Offline
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Wait, Reg B applies to commercial loans?? wink hahaha

We have similar issues here. Files closed for Incompleteness - with no NOI sent. Should have been adversed incomplete..

Yes lenders.... it applies (sigh)...
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#2135828 - 06/26/17 05:07 PM Re: Notice of Incomplete banker-12
banker-12 Offline
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Joined: May 2007
Posts: 1,240
So if the customer provided the information and the loan is approved, it's not incomplete; therefore, no notice is required, correct?. Even if it was later withdrawn by the customer? We just need to justify that the approval was made within 30 days from receipt of the pending items.


"At its option, a creditor may inform the applicant orally of the need for additional information. If the application remains incomplete, the creditor shall send a notice in accordance with paragraph (c)(1) of this section (an adverse action notice). [§1002.9(c)(3)]"

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#2136202 - 06/28/17 02:54 PM Re: Notice of Incomplete banker-12
Truffle Royale Offline

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Withdrawal can only happen up to the point the loan is decisioned. If a loan is approved, it cannot be withdrawn by the customer. After approval, the customer can only chose not to accept the approval.

"We just need to justify that the approval was made within 30 days from receipt of the pending items."
Correct.

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#2136211 - 06/28/17 03:05 PM Re: Notice of Incomplete banker-12
raitchjay Online
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OK
Just for the record, Reg. B has no mention of "approved, not accepted"...so for Reg. B purposes, an "approved" loan can be "withdrawn".
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#2136217 - 06/28/17 03:14 PM Re: Notice of Incomplete banker-12
Truffle Royale Offline

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My bad. Brain was in HMDA mode.

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#2136325 - 06/28/17 07:28 PM Re: Notice of Incomplete banker-12
David Dickinson Offline
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David Dickinson
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Posts: 18,762
Central City, NE
raitchjay is correct. In fact, §1002.9(e) even gives an example of an approved loan that is later withdrawn:
If the creditor approves the application and the applicant has not inquired within 30 days after applying, the creditor may treat the application as withdrawn and need not comply with the notification requirements of Regulation B.

Truffle is correct, that HMDA does not allow this. Once a decision is made, an application cannot be coded as a "withdrawal" under HMDA.
A financial institution also reports application withdrawn if the financial institution provides a conditional approval specifying underwriting or creditworthiness conditions… and the application is expressly withdrawn by the applicant before the applicant satisfies all specified underwriting or creditworthiness conditions. A preapproval request that is withdrawn is not reportable under HMDA. [Commentary to §1003.4(a)(8)(i) #5]
AND
A financial institution reports that the application was denied if it made a credit decision denying the application before an applicant withdraws the application or the file is closed for incompleteness. [Commentary to §§=1003.4(a)(8)(i) #4]
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