“Terms” vs. “Types” of Credit

When a loan application is denied, compliance isn’t necessarily the first thing many loan officers think about.  Why waste time on an application that isn’t going anywhere when you could put your time and effort into one that will?  While it isn’t wrong to think this way, it’s still very important to ensure that the adverse action compliance requirements in both Regulation B and the Fair Credit Reporting Act are being met.

Did you know that adverse action notice requirements can differ depending on whether an applicant applies for a certain “term” of credit versus a particular “type” of credit?  If you don’t offer a particular type of credit, an adverse action notice is not needed.  For example, if an applicant applies for a home loan but your bank does not make home loans of any kind.  On the other hand, if an applicant applies for a 30-year home loan but your bank only makes 5-year home loans, an adverse action notice IS needed.  In this case, you do make home loans, just not the term the customer requested.

Looking for more answers to adverse action notice questions?  Join us for our Adverse Action Notices webinar on June 21, 2017.

Published
2017/06/14
Deb Irving
David Dickinson

David Dickinson

David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.

He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.

David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.

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