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Term Sheet for Commercial Considered App?

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Question: 
When a commercial department is presented with an opportunity to provide a term sheet for a commercial loan - prior to receiving a loan application - is this request to be considered a loan application? Does a HMDA-reportable issue apply if the bank never received a loan application and there is no loan decision?
Answer: 

The bank should carefully consider the various situations in commercial lending and apply the application decision to them case by case. Many times with a term sheet the customer is speaking with many banks and deciding which one to submit an application to. No due diligence or financial analysis is generally done with a term sheet.

Some banks that use terms sheets have determined that a signed term sheet, payment of the requested fee and receipt of financial statements is considered to be the application. At that point the bank begins to consider the actual request and perform financial analysis and conduct due diligence.

First published on BankersOnline.com 9/17/12

First published on 09/17/2012

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