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What’s an application for AANs?

Question: 
If you do a preapproval/prequalification where you have five pieces of information (not the property location) and the customer is approved for an amount but the customer never comes back to the bank, what is the proper procedure?
Answer: 

It appears that you are confusing the TRID definition of the term "application" with the Regulation B definition of the term.

For purposes of Regulation B the "application" means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested. This definition differs from the "six elements" definition used for TRID.

A creditor is encouraged to provide consumers with information about loan terms. However, if in giving information to the consumer the creditor also evaluates information about the consumer, decides to decline the request, and communicates this to the consumer, the creditor has treated the inquiry or prequalification request as an application and must then comply with the adverse action requirements. Whether the inquiry or prequalification request becomes an application depends on how the creditor responds to the consumer, not on what the consumer says or asks.
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Learn more about Jack Holzknecht and Kelly Owsley’s webinar Adverse Action Notices

First published on 01/29/2017

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