[kcco]

How would I report the following for HMDA:

Husband and wife apply for a loan. Husband is denied with an AAN. Wife is counteroffered and the loan closes…with no new application in her name only. I can not report a denial and an origination for the same loan request. So, how do we handle this? I was always told if you deny one person that the whole transaction is denied and you have to start a new application. Please advise…

[kowsley]

Was the husband not being on the loan part of the counteroffer? You wouldn’t deny the individual, you would deny the transaction. If you made a counteroffer and originated it based on the counteroffer then you report it as an origination; there would not be a denial reported in this case.

[KRT]

Can you clarify please? What is the best way to handle these situations? Should the original loan application be denied and a new application started? Or, is it also acceptable to provide a combined Adverse Action Notice with Counteroffer, where the husband’s notice shows his credit reasons with a counteroffer to make the loan in the wife’s name only, and the wife’s notice shows co-borrower credit as the reason with a counteroffer to make the loan in her name only? If we provide them with a combined adverse action/counteroffer notice, is it acceptable to continue the transaction with the original application and report the transaction as an origination?

[kowsley]

The best way to handle it is send the counteroffer notice (Model form C-4 in Appendix C of Reg. B) which details the terms of the counteroffer and includes the adverse action notice if the applicant doesn’t accept the counteroffer. By utilizing this form, it would be acceptable to move forward with the transaction, once the counteroffer is accepted, and report the transaction as an origination.

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