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New Loan Policies & Adverse Action Notices

We have a customer with a current loan who called and requested a loan for $500.00. The officer ran a credit report and denied the loan on reasons resulting from the credit report. However, the same reasons were there a year ago when we made her a loan. Our loan policies have changed, and as a result, she no longer qualifies. Do we send her a denial using those reasons even though we make the loan before?

Answer by Andy Zavoina:

Yes. There would be no other factual reason. Documenting the loan file that there was a change in policy, approved by the board, will answer questions if consistency in underwriting standards are questioned.


Answer by Lucy Griffin:

Absolutely send the adverse action notice. Always tell the truth and the whole truth when giving reasons for denial. You could save yourself a call from this customer if you take the time to note on notice that the policy has changed. But you wouldn't have to do this. And, as Andy suggests, documentation in the file will help answer questions in the future.

-February 19
Flood - Dodging the BIG Wave , presented by Lucy Griffin and David Dickinson

First published on 2/2/03

First published on 02/02/2003

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