Mortgage Loan Modification and Regulation B’s Adverse Action Requirement

December 23, 2009

The purpose of this letter is to address questions regarding whether adverse action notices under Regulation B (Equal Credit Opportunity) are required for mortgage loan modification declinations, including those made pursuant to the U.S. Department of Treasury's ('Treasury') Making Home Affordable Modification Program ('HAMP'). Regulation B requires an adverse action notice when a creditor declines an application for an extension of credit from a borrower that is not currently delinquent or in default on that loan.1 Below is a four-part analysis to determine whether an adverse action notice is required, using HAMP as an example. For mortgage loan modifications outside the HAMP, the same factors listed below should be analyzed.