Adverse Action Notices for Loan Declines

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Question:

If we have two applicants and one has excellent credit and one has bad credit and we decline the loan, is it required that we send out an Adverse Action Notice to the applicant with the good credit and indicate that the co-applicant does not meet the minimum standards?

Answer:

Reg. B requires an AAN be sent to the primary applicant with the specific reasons for denial. Co-applicant did not meet minimum standards is not acceptable. You must tell the applicant the specific reason(s) why the co-applicant did not meet the minimum standards such as delinquent credit, collections, bankruptcy, etc.

First published on BankersOnline.com 1/2/12