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Does the Equal Credit Opportunity Act and Regulation B permit lenders to decline a commercial real estate loan based on an appraisal prior to completing the underwriting process?

Yes, lenders may decline a credit request based on inadequate collateral even if they have not yet completed the underwriting process. The statute and regulation prohibit discrimination on an enumerated prohibited basis, such as race, sex, marital status. They do not prohibit decisions based on the value of collateral or require that underwriting be completed before denying a loan application. The other option, in this is case, is to counteroffer for a lesser loan amount. (December 2018)

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