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Send Loan Denials to Applicant & Guarantor?

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When you are denying a loan and you send a denial to the applicant do you also need to send one to the guarantor?

Reg B states:
When an application involves more than one applicant, notification need only be given to one of them, but must be given to the primary applicant where one is readily apparent [Section 202.9(f)].

However, if the credit report of the guarantor leads to the denial, the Fair Credit Reporting Act requires disclosure of this information to the guarantor. Therefore, you will need to send two denials [one to the primary applicant(s) and one to the guarantor]. The primary applicant’s denial notice would provide the reasons the guarantor did not qualify as well as the other reasons the primary applicant did not qualify. The guarantor's adverse action notice should state specific reasons explaining how the credit report was used adversely.

First published on 1/14/08

First published on 01/14/2008

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