Good afternoon,

I have an interesting question about a denied loan that I am trying to work out. The customers applied for a HELOC. The officer is new to our bank and didn't realize that we do not have a HELOC product at our bank. He did pull credit, but he ended up having to deny the customers and he did send out an Adverse Action Notice citing that we do not offer HELOC loans.

If this were a HELOC, then my bank would not have to report this loan, because we are definitely under 200 open end lines of credit. However, if this were any other turn down I would have to report a HMDA, because I have all the pieces of information that we need. If I have to report this loan on my HMDA LAR, then what would my Reason for Denial be? If this had not been for a product that we don't offer, then this loan would definitely have been approved.

I just don't know what to do with this turn down. Any help would be appreciated.

Thanks

You do not have an adverse action

(c) Adverse action.

(2) The term does not include:

(v) A refusal to extend credit because the creditor does not offer the type of credit or credit plan requested.

So, if I do not have an Adverse Action, am I required to retain this application and Credit Report?

You had an application for a HELOC. You don't report HELOCs...

So, if I do not have an Adverse Action, am I required to retain this application and Credit Report?

1002.12(b)
(3) Other applications. For 25 months (12 months for business credit, except as provided in paragraph (b)(5) of this section or otherwise provided for in subpart B) after the date that a creditor receives an application for which the creditor is not required to comply with the notification requirements of §1002.9, the creditor shall retain all written or recorded information in its possession concerning the applicant, including any notation of action taken.

Thank you so much for the help.