We frequently have customers who will come in and apply for a loan to refinance their home, but then want us to hold the application until they are ready to proceed. Sometimes the customer just hasn't decided or is watching the rates and waiting until they get to a certain level before they are going to do it. We take an application and pull a credit bureau on these. The lenders are in communication with them every week or every other but this can go on for several months depending on the situation.

Eventually, if we can't get ahold of the applicants, they quit returning phone calls etc. we would send a notice of incompleteness or adverse action but that might be a couple of months down the road.

Auditors are telling us that we have to send an adverse action notice or notice of incompleteness within 30 days? Is there a way around this if it is clear from the lenders notes that we are waiting for the customer to give the go ahead to proceed with the application?

Is this a pre-approval program? IMHO - you should be underwriting them as pre-approvals and either denying them or issuing a pre-approval commitment letter with an expiration date. That would close your timing window either way. The customer responds prior to the expiration date of the letter or a new application process is started.