All in Regulation B

Excessive Obligations vs Insufficient Income

Adam Witmer
Adverse Action, Compliance Management, Regulation B

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.  

Regulation B 30 Day Rule

Adam Witmer
Adverse Action, Regulation B

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.

NMLS Number on Adverse Action Notice

Adam Witmer
Adverse Action, SAFE Act, 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...

ECOA Incomplete Application Notice

Adam Witmer
Regulation B, Fair Lending

An incomplete application can create unique challenges for a financial institution.  For example, many financial institutions have a difficult time just understanding what an incomplete application really is.  To understand what an incomplete application is, we must first understand how Reg B defines a completed application.  Under Regulation B, a completed application is an application in which a creditor...