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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?
In looking at the five general factors listed in the commentary for 1026.3(a) – 3(I):
a) Relationship of borrower’s primary occupation to acquisition. Borrower’s occupation is unrelated, so I would consider this a consumer factor.
b) Degree to which the borrower will personally manage the acquisition. Who will manage the acquisition is unknown (likely the borrower), so I consider this a neutral factor.
c) Ratio of income from the acquisition to total income of borrower. Income from the acquisition is unknown, but most likely would be a small percentage of the borrower’s total income. I would consider this a consumer factor.
d) The size of the transaction. This is a relatively small loan, so I would consider this a consumer factor.
e) The borrower’s statement of purpose for the loan. The borrower did not state whether the credit was commercial or consumer, only that he was purchasing artwork for resale. I would consider this a neutral factor.
Based on this analysis of the factors, would you agree with the conclusion that it is consumer purpose?
