(a) Notification of action taken, ECOA notice, and statement of specific
reasons.
(1) When notification
is required. A creditor shall notify an applicant of action taken
within—
(i) 30 days after receiving a completed
application concerning the creditor’s approval of, counteroffer to,
or adverse action on the application;
(ii) 30 days after taking adverse action
on an incomplete application, unless notice is provided in accordance
with paragraph (c) of this section;
(iii) 30 days after taking adverse action
of an existing account; or
(iv) 90 days after notifying the applicant
of a counteroffer if the applicant does not expressly accept or use
the credit offered.
6-044
(2) Content of
notification when adverse action is taken. A notification given
to an applicant when adverse action is taken shall be in writing and
shall contain a statement of the action taken; the name and address
of the creditor; a statement of the provisions of section 701(a) of
the act; the name and address of the federal agency that administers
compliance with respect to the creditor; and either—
(i) a statement
of specific reasons for the action taken; or
(ii) a disclosure of the applicant’s
right to a statement of specific reasons within 30 days, if the statement
is requested within 60 days of the creditor’s notification. The disclosure
shall include the name, address, and telephone number of the person
or office from which the statement of reasons can be obtained. If
the creditor chooses to provide the reasons orally, the creditor shall
also disclose the applicant’s right to have them confirmed in writing
within 30 days of receiving the applicant’s written request for confirmation.
6-044.1
(3) Notification to business credit applicants. For business credit, a creditor shall comply with the notification
requirements of this section in the following manner:
(i) With
regard to a business that had gross revenues of $1 million or less
in its preceding fiscal year (other than an extension of trade credit,
credit incident to a factoring agreement, or other similar types of
business credit), a creditor shall comply with paragraphs (a)(1) and
(2) of this section, except that—
(A) the statement of the action
taken may be given orally or in writing, when adverse action is taken;
(B) disclosure of an applicant’s
right to a statement of reasons may be given at the time of application,
instead of when adverse action is taken, provided the disclosure contains
the information required by paragraph (a)(2)(ii) of this section and
the ECOA notice specified in paragraph (b)(1) of this section;
(C) for an application made
solely by telephone, a creditor satisfies the requirements of paragraph
(a)(3)(i) of this section by an oral statement of the action taken
and of the applicant’s right to a statement of reasons for adverse
action.
6-044.2
(ii) With regard to a business that
had gross revenues in excess of $1 million in its preceding fiscal
year or an extension of trade credit, credit incident to a factoring
agreement, or other similar types of business credit, a creditor shall—
(A) notify the applicant, within a reasonable time, orally or in
writing, of the action taken; and
(B) provide a written statement of the reasons
for adverse action and the ECOA notice specified in paragraph (b)(1)
of this section if the applicant makes a written request for the reasons
within 60 days of the creditor’s notification.
6-045
(b) Form
of ECOA notice and statement of specific reasons.
(1) ECOA notice. To satisfy the disclosure requirements of paragraph (a)(2) of this
section regarding section 701(a) of the act, the creditor shall provide
a notice that is substantially similar to the following:
The federal Equal Credit
Opportunity Act prohibits creditors from discriminating against credit
applicants on the basis of race, color, religion, national origin,
sex, marital status, age (provided the applicant has the capacity
to enter into a binding contract); because all or part of the applicant’s
income derives from any public assistance program; or because the
applicant has in good faith exercised any right under the Consumer
Credit Protection Act. The federal agency that administers compliance
with this law concerning this creditor is [name and address as specified
by the appropriate agency listed in appendix A of this regulation].
6-046
(2) Statement
of specific reasons. The statement of reasons for adverse action
required by paragraph (a)(2)(i) of this section must be specific and
indicate the principal reason(s) for the adverse action. Statements
that the adverse action was based on the creditor’s internal standards
or policies or that the applicant, joint applicant, or similar party
failed to achieve a qualifying score on the creditor’s credit scoring
system are insufficient.
6-047
(c) Incomplete applications.
(1) Notice alternatives. Within 30 days after receiving an application that is incomplete
regarding matters that an applicant can complete, the creditor shall
notify the applicant either—
(i) of action taken, in accordance with
paragraph (a) of this section; or
(ii) of the incompleteness, in accordance
with paragraph (c)(2) of this section.
(2) Notice of
incompleteness. If additional information is needed from an applicant,
the creditor shall send a written notice to the applicant specifying
the information needed, designating a reasonable period of time for
the applicant to provide the information, and informing the applicant
that failure to provide the information requested will result in no
further consideration being given to the application. The creditor
shall have no further obligation under this section if the applicant
fails to respond within the designated time period. If the applicant
supplies the requested information within the designated time period,
the creditor shall take action on the application and notify the applicant
in accordance with paragraph (a) of this section.
(3) Oral request
for information. At its option, a creditor may inform the applicant
orally of the need for additional information. If the application
remains incomplete, the creditor shall send a notice in accordance
with paragraph (c)(1) of this section.
6-048
(d) Oral notifications by small-volume
creditors. In the case of any creditor that did not receive more
than 150 applications during the preceding calendar year, the requirements
of this section (including statements of specific reasons) are satisfied
by oral notifications.
(e) Withdrawal of approved application. When an applicant submits
an application and the parties contemplate that the applicant will
inquire about its status, if the creditor approves the application and the
applicant has not inquired within 30 days after applying, the creditor
may treat the application as withdrawn and need not comply with paragraph
(a)(1) of this section.
6-049
(f) Multiple
applicants. When an application involves more than one applicant,
notification need only be given to one of them but must be given to
the primary applicant where one is readily apparent.
(g) Applications submitted through a third
party. When an application is made on behalf of an applicant
to more than one creditor and 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 this section,
directly or through a third party. A notice given by a third party
shall disclose the identity of each creditor on whose behalf the notice
is given.
