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All in Adverse Action
This Compliance Clip (video) answers the question of whether the FCRA pieces of the AA Notice must be completed every time, or if creditors can combine certain FCRA disclosures with the AA Notice. Adam attempts a new approach to adding a bit of humor to a mundane compliance topic and fails terribly. He makes a promise to never attempt this approach again (unless he is asked).
This Compliance Clip focuses on what should be considered when conducting a secondary review of adverse action notices. Adam explains the two main things that every financial institution should look for during a review and provides some examples of what to look for.
Over the years, I have seen many financial institutions struggle with the adverse action notice requirements under Regulation B, especially in regards to what denial reasons should be listed on the adverse action notice. This is particularly true when an applicant is denied for a reason relating to income and the applicant’s debt-to-income (DTI) ratio as most adverse action notice vendors provide two similar, but different, options relating to income: excessive obligations in relation to income and insufficient income for the amount of credit requested.
When a financial institution receives a request for a loan, they are required to respond to that applicant within a certain amount of time to advise them of their credit decision. That time, however, can vary based on the specific situation and/or financial institution, which has left many compliance professionals confused as to what actually is required. Therefore, let’s take a quick look at the rules and break down what they mean.
In this video, Adam talks about incomplete applications and how to handle them in accordance with Regulation B.
The SAFE Act requires that each registered Mortgage Loan Officer (MLO) provide their unique identifier (NMLS #) to applicants according to certain requirements. For example, the NMLS number must be provided to the customer upon request, before acting as a mortgage loan originator, and through the MLO’s initial written communication with a consumer. For this reason, most financial institutions have established procedures to include the NMLS number on...
Over the years, I have been asked many times if it is permissible to combine an adverse action notice with an FCRA notice like the risk-based pricing notice. Basically, these notices (the adverse action notice and the risk-based pricing notice or credit score disclosure exception notice) have similar information. For example, they each require
