[Kristin]

In reference to 1002.2(c)(2)(v) – what is an example of something considered “type of credit or credit plan requested”? The commentary to this definition states the following:
Paragraph 2(c)(2)(v).
1. Terms of credit versus type of credit offered. When an applicant applies for credit and the creditor does not offer the credit terms requested by the applicant (for example, the interest rate, length of maturity, collateral, or amount of downpayment), a denial of the application for that reason is adverse action (unless the creditor makes a counteroffer that is accepted by the applicant) and the applicant is entitled to notification under §1002.9.

I am confused about collateral being a term of credit. When first thinking about the definition it seemed to me that if the bank does not do any mobile home loans, we would not need to send an adverse action notice to a customer requesting a mobile home loan. However, after reading the commentary I am not so sure.

Also, in our secondary marketing department, if we deny a loan based on the fact that we do not offer the program that the customer is requesting, is that considered adverse action and is a notice required?

[rcooper]

I would use the items listed to determine the difference in credit terms vs. credit plan, meaning the interest rate, length of maturity, collateral, or amount of down payment. My interpretation of “collateral” used in that section would mean insufficient collateral. For example, a mobile home may not necessarily be insufficient collateral, but you don’t offer a loan product that allows mobile homes to be taken as collateral so that would mean you don’t offer the plan requested. If you do take mobile homes as collateral and the mobile home was insufficient collateral then an AAN would be necessary.

If the lender does not offer the credit product requested (mobile home loans, HELOCs, ARMs, etc.) then an AAN isn’t required, per 1002.2(c)(2)(v).

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