Confusion with brokered loans..

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    Some confusion has come up involving loans were we are the broker. I understand that whoever makes the credit decision reports HMDA. The confusion comes in the following scenario: We take an application, send it through the company’s underwriting “system” aka: GUS. If for some reason “GUS” spits out “ineligible” or “refer” (they don’t want the loan) then the process stops and I am told at that point an Underwriter never sees it. To me, that is their underwriter. Their company made some kind of decision, either from a “system” or from an individual (underwriter). If we have the findings from GUS, then I am inclined to NOT report this loan on our LAR since we made no credit decision. Furthermore, we should not be preparing Adverse Actions on the transcations. Is this correct?


    From the information you’ve given, it sounds like the investor isn’t reviewing the file and therefore isn’t making the credit decision. There is discussion in the commentary to Reg C that covers using an investor’s underwriting criteria. If you haven’t done so already, please take a look at the commentary 12 CFR 1003.1(c)-2-4. linked here:

    As for the adverse action, you should look at 12 CFR 1002.9(g) and your agreement with your investor to determine who should be sending the adverse action. But I would say that if the application isn’t being submitted to the investor then your bank should also be sending the adverse action.
    Reg B 1002.9(g):
    Reg B Commentary 1002.9(g):

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