Pandemic Loan Modifications and Reg B

Does a request for a loan modification in connection with the Interagency Pandemic Guidance trigger Reg B application and potentially adverse action requirements if the request is turned down? The definition of "adverse action" is contingent on the definition of "application", although there is specific language that says that refusal to increase credit as requested by a borrower would be adverse action. The definition of "application" only keys in on a request for the "extension" of credit - it does not address any request for a change in terms of an existing extension of credit. Can I take from that an interpretation that adverse action notice under Reg B would not be required if we turned down a request for payment extension or modification?

If they are not currently delinquent, I would say it does.

I would consider a request for modification as a request for credit and treat as any other application for Reg B purposes. If you denied the request, an adverse action notice should be sent.

Does meet the definition of an application? Based on what, Randy? Not saying you're wrong as that's my gut feeling too. But I just want to have some support one way or another. I've submitted an interpretation request to CFPB as well.

Here is how I'd look at it. I think you're right that the key here is the "extension of credit" part of the application definition.

Extension of credit is defined under 1002.2(q) as the granting of credit in any form. Credit is defined under 1002.2(j) as the right to defer payment of a debt.

You have someone requesting the right to defer payment of a debt. I think it meets the definitions.

Makes sense, ComplyGuy.

https://www.federalreserve.gov/boarddocs/caletters/2009/0913/caltr0913.htm

Perfect, Randy! Exactly what I needed.

Another question on this topic. If the Bank received an incomplete PPP application, would that trigger an incomplete letter?

I think is does.

Never mind the above, ^^^ found my answer.

Hi Soccer, what was the answer that you found (I am looking for same - I am assuming it is needed)? Thanks!

My consultant responded that it is required, and cited 1002.9.

I have not seen it addressed in anything that I have read, so to me that tells me that it would still apply also.

So what are they going to do - complete the application now for a product that is no longer offered?

I am recommending any incomplete applications that were received prior to the suspension of the program be sent an incomplete. How do you defend prior to the suspension if you communicated via email (yup) that it was not complete not sending the required notice?

Additionally if the program gets refunded those businesses will have hopefully responded and be ready for the next round.

So, you are sending them model form C-6?

Dear Applicant: Thank you for your application for credit. The following information is needed to make a decision on your application: _____

We need to receive this information by _____ (date). If we do not receive it by that date, we will regrettably be unable to give further consideration to your credit request.

Or you are sending them an adverse action notice?

C-6

That makes no sense to me to be asking them for more information when you can't make the loan. While there may be more funding, who is to say what it is going to look like.