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We have relationships with several secondary market mortgage investors. All of them make the credit decision and do the HMDA Reporting. All of them now have a policy that they never deny an applicant. They just close the application for “incompleteness.” In the past 2 years, all of the investors have moved to making us send out the adverse action notice. I understand why they have done this. The applicants applied with us, and it was probably difficult for them to ensure the AAN reflected the correct bank.
We are struggling with the reason we provide on the AAN. We believe putting “incomplete” in misleading because many of these are denied for DTI ratios. If we state the real reason the loan is being denied, it will not agree with the HMDA reporting at the other bank (Investor).
How are other banks handling this?
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