It appears that a borrower was sent an adverse action notice based poor credit history and score. The only information provided was the borrowers name, social security number, and the subject property address. A credit report was pulled and the borrower was denied based on information in the credit report.

Did this trigger adverse action under FCRA since a consumer credit report was pulled?

Did this trigger adverse action under Regulation B? There is not indication of the type of credit requested by the borrower.

Are there any fair lending concerns if an adverse action notice is sent without an application being triggered under Regulation B?

Thanks in advance. :S

it is an application based on what you said. You have an application under ECOA, and FCRA is needed.

An application under ECOA is anything that is given to a bank and the bank makes a decision. There are no paper requirements. It can be all verbal. See commentary below.

1002.2(f)3 OSC
3. When an inquiry or prequalification request becomes an application. 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 notification requirements under §1002.9. 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.

Thanks Rocky!

So Regulation B is all about how we respond to information provided by the consumer. Providing basic information about loan products, rates, and terms to the consumer would not be an application (inquiry), but if information is provided by the consumer, evaluated by the lender and it is decided that the loan would be denied based on the information provided, under Regulation B, THAT is an application triggering the notice requirements.

Correct....

An example of an application and denial could be the following [very short] exchange. (how bank responds)

Cust - I'd like a home improvement loan.
LO - Where do you live?
Cust - Eagle Condominiums, two blocks from here.
LO - The condo's have to be approved, that one is not. We can't do it.

Bank analyzed information and verbally denied loan. Adverse action required (if you could ever train a loan officer like that.)

Thanks for the great example. I'll store that one away for the next time a loan officer asks about what triggers reg b and adverse action.

I think you might have more issues than completing adverse actions. It would appear you have a staff that does not realize what constitutes an application, which is lending 101.

You may also have loan officers pulling credit reports without a permissible purpose.

Welcome to BOL Grapetastic.

Agreed, there is a great training opportunity.