Looking for the BOL community to chime in on how they handle 4 scenarios listed below since I cannot find any regulation dictating proper course of action (whether a simple CIC and redisclosure is all that's needed (or maybe it doesn't even require a CIC), or if an AAN needs sent to make way for a new application). These are regarding closed-end mortgage loan applications.

1. Borrower and coborrower (same app) switch positions on the application.

2. Borrower is dropped off the app and coborrower slides into the primary spot.

3. Coborrower is dropped off the app, borrower remains.

4. Borrower and comortgager (2 apps) switch positions.

From what I've read in a previous BOL post that was similar in nature to #3, it's up to the investors preference. They may prefer the existing loan to be actioned then a new one started to ensure that they receive a clean file.

I think opinions may vary depending on what the reason for the switch or removal is, and how far along the application is in the loan process, but any insight would be appreciated!

What does the order of the applicants on an application form have to do with the tea in China?

What do you mean "dropped off"?

"Dropped off" meaning they're removed from the application.

I'm not a big fan of tea myself but if I'm catching your drift, scenario #1 would not require an AAN to be sent on the existing loan and a new application to be started, OR a CIC and redisclosure, correct? Just make the switch and keep it moving?

Make the switch for what purpose?

How do you "remove" someone from an application? You mean you are going to deny the application if the parties that applied remain on the application?

On a fair lending side, there will be an issue if a female applies as borrower with a male co-borrower, but the loan is made with the male listed first on the documents. Examiners will look to see if the bank has a gender bias.

Rlcarey and Rocky P, from what I read on a previous thread (https://www.bankersonline.com/forum/ubbt...ome#Post2157701), I understand that fair lending flags would be raised if the intent behind switching borrowers is to potentially manipulate AUS (which I think may be the driving force behind most of the CIC's that we see for this). Makes sense, great point. Going forward, I'm guessing that it would be best for our LO's to place the "stronger" borrower in the primary position with the "weaker" applicant in the coborrower spot from the get-go? And when we see future CIC's to flip the primary borrower and coborrower for AUS manipulation purposes, would you recommend that we cancel/deny/action the file and re-app instead?

Rlcarey, for your second and third questions, let's say the situation is that the borrower could get a lower interest rate if the coborrower with crappy credit was removed.

Foghorn, I just talked to my Underwriter for verification and it sounds like you're making a problem where none exists because the AUS does NOT require the 'stronger' borrower to be in first position. As far as AUS is concerned, on a joint application both applicants are equal no matter which one is listed first.

Second point, imho, switching borrowers is NOT a valid changed circumstance. You can't switch and redisclose.

As for removing an applicant, those can be denials and counter-offers. Unless you're looking to give better pricing on a loan, there's no reason to remove a co-borrower if between the two of them the loan works. So if the LO mentioned better pricing and the applicant with the lower credit said 'oh, then just take me off' that is a valid CC (borrower request) and a withdrawal.