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Adverse Action Notice Requirements

Answered by: 
Lucy Griffin

Question: 
Mortgage BankingAdverse Action Prequalification (inquiry) process (no written application) The lender obtains credit information from the consumer, as well as pulls a credit report. If, based on credit information, the consumer can not be offered credit at this time (for example, because of a bankruptcy) and is counseled that once the bankruptcy is cleared up they are encouraged (never discouraged) to return and the mortgage divison would reevaluate, would this constitute a denial and require adverse action?
Answer: 

Yes. There should be both an adverse action notice for purposes of Regulation B and for Fair Credit Reporting. The report was used to deny credit even though the customer was encouraged to come back later. The bottom line is that the customer was told to come back when qualified and told he's not qualified now.

First published on BankersOnline.com 2/11/02

First published on 02/11/2002

Filed under: 
Compliance
Filed under compliance as: 
Adverse Action
Bankruptcy
Credit Report
Reporting

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