Cassandra Phillips requested a loan to purchase a boat. She asked for $15,000 at 7.5 percent for seven years. The bank considered her request but decided, considering her income and credit history, the best offer of credit the bank could make was $10,000 at 8.25 percent for five years. Rhonda Mays, the loan officer, wrote a letter, setting forth the terms the bank could offer. The letter was mailed on July 1. Ms. Phillips received the letter and began to look elsewhere for a loan on the terms and conditions she wanted. Does the bank have any additional responsibility to Ms. Phillips?

Question

Quizplus · Accepted Answer

The bank must send an adverse action notice because Ms. Phillips did not take the bank's counteroffer. Under the Equal Credit Opportunity Act, a bank must provide an adverse action notice when it denies or counteroffers a loan to a potential borrower. The notice must include the reason for the adverse action and an explanation of the borrower's right to obtain the reasons for the decision. In this case, the bank offered a counteroffer that was different than what Ms. Phillips requested, which means they must provide an adverse action notice.

Cassandra Phillips Requested a Loan to Purchase a Boat