Notice of Action Taken

Question: We are a mortgage broker. Recently, we submitted an application to two separate lenders. One of the lenders originated the loan, but the other one did not send out the notice of action taken to our borrower. Isn’t the other lender required to send that notice?

Answer
When an application is made on behalf of an applicant to more than one creditor, such as when a mortgage broker submits an application to more than one creditor, if the applicant expressly accepts or uses credit offered by one of the creditors, notification of action taken by any of the other creditors is not required. If no credit is offered or if the applicant does not expressly accept or use any credit offered, each creditor taking adverse action must comply with the ECOA notification requirements, directly or through a third party, such as a mortgage broker.

Any notice given by a third party must disclose the identity of each creditor on whose behalf the notice is given. [12 CFR § 202.9(g)]

Jonathan Foxx is president and managing director of Lenders Compliance Group and Brokers Compliance Group, mortgage risk management firms devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or e-mail at [email protected].