Question: Are RESPA disclosure required within three business days if we decline the application within the three day period and mail the declination letter?
Answer: According to the HUD web site regarding RESPA required disclosures, The documents normally required at the time of the application do not have to be provided. Per HUD's web site, if the lender turns down the loan within three days,
however, then RESPA does not require the lender to provide these documents. The following is from the HUD web site:
http://www.hud.gov/offices/hsg/sfh/res/respamor.cfm#WI
RESPA REQUIRED DISCLOSURES:
At the time of loan application, when borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:
a Special Information Booklet, which contains consumer information regarding various real estate settlement services. (Required for purchase transactions only) and a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. This is only an estimate and the actual charges may differ. If a lender requires the borrower to use of a particular settlement provider, then the lender must disclose this requirement on the GFE.
A Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. It also provides information about complaint resolution.
If the borrowers don't get these documents at the time of application, the lender must mail them within three business days of receiving the loan application.
If the lender turns down the loan within three days, however, then RESPA does not require the lender to provide these documents.
The RESPA statute does not provide an explicit penalty for the failure to provide the Special Information Booklet, Good Faith Estimate or Mortgage Servicing Statement. However, bank regulators may choose to impose penalties on lenders who fail to comply with federal law. Please read the section on RESPA enforcement for more information.
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