Is it the responsibility of the broker or lender to send adverse action letters to borrowers?
Short answer, both. When an application is submitted through a third party (broker), the application is often sent to more than one creditor. If the applicant uses the credit offered no notification is required. However, if no credit is offered or if the applicant does not expressly accept or use any of the credit offered, each creditor taking adverse action must send written notification, directly or through the third party. A notification given by a third party shall disclose the identity of each creditor on whose behalf the notice is given. See 12 CFR Section 202.9(g) Regulation B for further information. NCCOB would expect to see a copy of the notification in both the broker’s and lender’s adverse action files. We recommend the broker send a notification letter to ensure proper notification was given.
