Did you know that you can issue an adverse action notice that doesn’t have to state the reasons for denial? We find most lenders don’t know anything about it. Now, there are a few catches.
First, you still have to provide an applicant with a written notice within 30 days of your credit decision. That written notice must still include things like the Equal Credit Opportunity Act statement about discrimination, and the name and address of your regulator, FCRA disclosures, depending on whether you used a credit report or a credit score in your decision. You also have to inform them of their right to request the reasons for denial within 60 days.
Second, you don’t have to give them the reasons for denial, but you still have to maintain documentation of them. You want to do that so if they request them, you can give them, which you do have to do within 30 days. Two, regulation B’s record retention requirements basically state you need to keep everything related to a denial for 25 months.
We’ve recently added a sample “No Reasons” Denial Form in the Free Lending Tools on our website. Also, if you feel like you want to learn more about the loan denial process, such as the notifications, timing requirements, fair lending implications, or more, I’d invite you to check out our Loan Denials & Other Adverse Action Notices webinar. It’s available for purchase now on our website in our on-demand training section. I’ve also provided a link to it below.
See the script – press the CC in the lower right on the video.