What must be done regarding an adverse action letter if there is a co-purchaser?

When an adverse action letter is issued as a result of an application for credit or financing, it is essential to understand the legal obligations surrounding this communication, especially in the context of co-purchasers. The correct course of action is to send the letter to both parties involved in the transaction.

This requirement stems from the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA), which emphasize that all applicants, including co-borrowers or co-purchasers, should be informed if adverse action is taken regarding their credit application. This ensures that both parties are aware of the reasons for the adverse decision and helps maintain transparency in the lending process. Sending the letter to both parties also provides them an opportunity to address any issues, rectify the situation, or seek clarification on their credit status.

In summary, distributing the adverse action letter to both co-purchasers upholds fairness and compliance with federal regulations, ensuring that all individuals involved are adequately informed about the decision affecting their financial standing.