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#1409511 - 06/29/10 06:18 PM adverse action counter offer
Web Offline
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Joined: May 2005
Posts: 316
Are there rules for when an adverse action needs to be issued vs. counter offer and if so where can i find them? Example: loan request is for $80,000 assuming $100,000 value in collateral. If appraisal comes back at $90K and loan amount needs to be reduced to $72K to be 80% should an adverce action be done stating insufficient collateral, but offering that we could do a loan in the amount of $72K? Does and adverse action need to be done in this instance or is it acceptable to verbially communicate the counter to the customer?

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#1409520 - 06/29/10 06:34 PM Re: adverse action counter offer Web
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
You need to review Reg. B 202.9 and its Commentary.

There is no regulatory requirement to make a counteroffer.

Your options are:

1. Deny the loan for insufficient collateral and send the AAN.
2. Verbally make the counteroffer and if they accept the counteroffer (loan closes) no further notice is required. If they do not accept the counteroffer you must send them an AAN within 90 days of notifying them of the counteroffer.
3. Send a combined AAN and counteroffer. This requires no further action.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1409527 - 06/29/10 06:42 PM Re: adverse action counter offer Web
Patsy Cline Offline
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Patsy Cline
Joined: Sep 2002
Posts: 1,117
On the road...
Counteroffers - Any time you approve an application but offer the applicant a term or terms different from those the applicant requested, you have made a counteroffer.

• If your counteroffer is accepted within 90 days of making the counteroffer, you are not required to do anything other than make the loan.

• If, however, the applicant refuses the counteroffer, then the application is treated as if it had been denied and you must send an adverse action notice… within 90 days of the counteroffer.

Preferred method - There is an alternative available that will eliminate the need for the 90-day follow-up. This notice combines elements of the adverse action along with a description of the counteroffer you are making. Using the combined notice eliminates the need to track the 90-day period -- a lender simply sends the notice and can forget about it unless you hear back from the applicant.
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#1441115 - 09/09/10 09:44 PM Re: adverse action counter offer Patsy Cline
river girl Offline
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We have a large indirect lending department. We make counteroffers to the auto/boat/rv dealers on behalf of the consumer for 100s of loan applications each week.

What are we required to provide with regard to counteroffers on these types of transactions? Do we have to mail counteroffers to all of these consumers?

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#1441181 - 09/10/10 12:44 PM Re: adverse action counter offer river girl
Dan Persfull Online
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Dan Persfull
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Bloomington, IN
Counteroffers do not have to be in writing, however if the counteroffer is not accepted you have to provide an AAN within 90 days of the counteroffer giving the specific reasons why the original request was not approved as applied for.

There is a section 202.9, don't remember off the top of my head the subsection, that exempts sending the AAN when multiple creditors were involved and the applicant accepted credit from one of the other creditors, however in most instances you're not going to know the applicant accepted credit from someone else.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2054463 - 12/16/15 05:48 PM Re: adverse action counter offer Dan Persfull
Newbie06 Offline
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Joined: Mar 2006
Posts: 731
Our counter offer happened when a customer applied for a HELOC and their appraisal didn't come back high enough. So, the lender countered with a different loan product and a reduced loan amount.

In this instance do I consider the application date the date the customer initially applied (need to report loan on HMDA) and treat it as one transaction? Mind you, we go from a non-TRID loan to a TRID loan...which is probably neither here nor there.

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#2054509 - 12/16/15 07:34 PM Re: adverse action counter offer Web
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
The counteroffer IMO does not affect the application date for HMDA reporting purposes. You would use the original application date.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2054514 - 12/16/15 07:45 PM Re: adverse action counter offer Dan Persfull
Newbie06 Offline
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Joined: Mar 2006
Posts: 731
Dan, how should we then look at this for LE purposes? Our application date is 12/1/2015 but our loan estimate was generated on 12/11/2015 because the loan officer and the customer decided to change the product on 12/8/2015...not unless we fall back to documentation in the file to document the timing of the LE etc...

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#2054644 - 12/17/15 02:00 PM Re: adverse action counter offer Web
RR Joker Offline
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RR Joker
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Posts: 20,654
The Swamp
That's what you would do...document the history as you should in any event. That way the next person (or examiner) touching the file can read the story. wink
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#2097210 - 09/07/16 03:42 PM Re: adverse action counter offer Web
ComplyCycle Offline
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ComplyCycle
Joined: Dec 2014
Posts: 454
Model Form C-4 incorporates the FCRA credit score disclosure information required under FCRA Sec. 615(a). Are the requirements under 615(a) necessary when a combined AAN/counteroffer letter is provided as a result of information located in a consumer's credit report, such as DTI, or is providing the credit score information simply a best practice?

Additionally, if we do have to provide the FCRA credit score disclosure information on the combined AAN/counteroffer letter, do we need to send a unique letter to each applicant since each applicant's consumer report will contain information unique to that applicant?

Thanks in advance for the help.
Last edited by ComplyCyle; 09/07/16 03:47 PM.
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#2232084 - 02/28/20 08:15 PM Re: adverse action counter offer Web
Cbravo Offline
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Joined: May 2018
Posts: 5
If a counter offer is given, is it also a requirement to provide a Risk Based Pricing Notice?
Last edited by Cbravo; 02/28/20 08:16 PM.
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#2232088 - 02/28/20 08:31 PM Re: adverse action counter offer Web
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Unless you are actually sending them an adverse action notice, I believe you do:

(b) Adverse action notice. A person is not required to provide a risk-based pricing notice to the consumer under §1022.72(a), (c), or (d) if the person provides an adverse action notice to the consumer under section 615(a) of the FCRA.
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