[kcco]

Some confusion has come up involving loans were we are the broker. I understand that whoever makes the credit decision reports HMDA. The confusion comes in the following scenario: We take an application, send it through the company’s underwriting “system” aka: GUS. If for some reason “GUS” spits out “ineligible” or “refer” (they don’t want the loan) then the process stops and I am told at that point an Underwriter never sees it. To me, that is their underwriter. Their company made some kind of decision, either from a “system” or from an individual (underwriter). If we have the findings from GUS, then I am inclined to NOT report this loan on our LAR since we made no credit decision. Furthermore, we should not be preparing Adverse Actions on the transcations. Is this correct?

[rcooper]

From the information you’ve given, it sounds like the investor isn’t reviewing the file and therefore isn’t making the credit decision. There is discussion in the commentary to Reg C that covers using an investor’s underwriting criteria. If you haven’t done so already, please take a look at the commentary 12 CFR 1003.1(c)-2-4. linked here: https://www.gpo.gov/fdsys/pkg/CFR-2014-title12-vol8/pdf/CFR-2014-title12-vol8-part1003-appI.pdf.

As for the adverse action, you should look at 12 CFR 1002.9(g) and your agreement with your investor to determine who should be sending the adverse action. But I would say that if the application isn’t being submitted to the investor then your bank should also be sending the adverse action.
Reg B 1002.9(g): https://www.gpo.gov/fdsys/pkg/CFR-2014-title12-vol8/pdf/CFR-2014-title12-vol8-sec1002-9.pdf
Reg B Commentary 1002.9(g): https://www.gpo.gov/fdsys/pkg/CFR-2014-title12-vol8/pdf/CFR-2014-title12-vol8-part1002-appI.pdf

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