Answer:
Commercial lending areas must determine what is an application for their particular process. A term sheet is generally when a customer is shopping, comparing fees, etc. No true analysis is done, merely general discussions of how a deal could be structured, what costs would be involved. Once the customer selects the bank with whom they will proceed, the term sheet is signed and a fee is generally paid. At that time, financial statement analysis begins and the bank considers it an application for Regulation B and HMDA purposes. The bank will give the customer a list of information needed for a complete application. If the customer presents that at one time (which does sometimes happen with commercial deals) it will be a completed application at that point.
If the bank does tell a customer they are not interested,that of course can trigger a denied application.
It is very important for the bank to specifically spell out what is an application in these situations for Reg B and HMDA purposes. If no actual application was received and no decision made, there is nothing to report.
Process is the key.
First published on BankersOnline.com 9/24/12
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