Lender took an app on 6/9/08. We found out that the borrower did not have hazard coverage on the property. Borrower finally gets coverage on 7/21.

Don't we need to have an AAN in the file reflecting that the "Credit application is incomplete. The following information is needed: hazard insurance coverage. If not received by (let's say 30 days), we will be unable to give further consideration to your request."

The loan was closed on 7/22, but I am thinking we should have done an AAN after we found out there was no hazard insurance because we didn't "take action" within 30 days.

Am I on the right track?

If your bank's procedures for considering an application complete include proof of hazard insurance and your lender has not made or communicated a credit decision to the borrower, you could have sent an incomplete application notice.

Here - hazard insurance would be a condition at closing, but not for credit approval. Our credit decision would have been based on proof of income and an accurate, complete application for our consumer loans.