Does the Bank Have Additional Responsibility to Ms. Phillips?
Question
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?
Answers
Explanations
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A. B. C. D.D
The correct answer is B. No. Because the customer decided to look elsewhere, there is no further responsibility.
When a customer applies for a loan, the bank has the responsibility to review their credit history, income, and other factors to determine whether to approve the loan and under what terms. In this case, Cassandra Phillips applied for a loan to purchase a boat, but the bank determined that the best offer they could make was $10,000 at 8.25% for five years, instead of the requested $15,000 at 7.5% for seven years.
The loan officer, Rhonda Mays, sent a letter to Ms. Phillips on July 1, setting forth the terms of the bank's offer. However, Ms. Phillips received the letter and decided to look elsewhere for a loan on the terms and conditions she wanted. In this situation, the bank does not have any additional responsibility to Ms. Phillips because they have already made an offer of credit based on their assessment of her creditworthiness.
Option A, "No. Because the bank made the offer of a loan, there is no further responsibility," is incorrect because while the bank has fulfilled its obligation to consider Ms. Phillips' loan application and make an offer based on its assessment of her creditworthiness, it still has other responsibilities under various laws and regulations, such as fair lending laws and regulations, that require it to avoid discrimination in lending and treat all applicants fairly.
Option C, "Yes. The bank must follow up with a phone call to determine if Ms. Phillips is still interested," is incorrect because there is no legal requirement for the bank to follow up with a phone call. The bank has already made an offer, and it is up to the customer to accept or reject it.
Option D, "Yes. The bank must send an adverse action notice because Ms. Phillips did not take the bank's counteroffer," is incorrect because the bank did not deny Ms. Phillips' loan application. Instead, it made a counteroffer based on its assessment of her creditworthiness. Therefore, there is no legal requirement for the bank to send an adverse action notice.
In summary, the bank has fulfilled its obligation to consider Ms. Phillips' loan application and make an offer based on its assessment of her creditworthiness. If Ms. Phillips chooses to look elsewhere for a loan, the bank does not have any additional responsibility to her.
