If everything looks good from a credit standpoint and also from a DTI and LTV standpoint; however, the title work comes back showing 2007 Property Taxes have not been paid . . . .

Should a Reg B Incomplete Application Letter be sent out (spelling out what we need from the applicant) "Proof of Payment of 2007 Property Taxes" (our bank has chosen to use Reg B Inc Letter versus using a denial listing Incomplete Application as the denial reason).

If we send out the Reg B Incomplete Application Letter --- is there any requirement to follow up with a Adverse Action Notice or are we done?

In our environment, we would send out the letter indicating this was an outstanding condition. If, after the letter (10 days), it is not satisfied, we would decline the loan as it is condition the borrower could not or did not meet. You are not able to get clear title.

Just my opinion.

If in your Reg B notice, you state something like:

"the following information is needed to make a decision on your application: [list]. We need to receive this information by [date]. If we do not receive it by that date, we will regrettably be unable to give further consideration to your credit request"

you're done.

For HMDA purposes -

Would you say the action taken is "file closed for incompleteness" or "approved not accepted"?

If you sent a Notice of Incompleteness and the customer did not respond, it's reported for HMDA as closed for incomplete.

Can we list both "your credit application is incomplete" AND specific reason for denial on the Adverse Action Notice?

Per commentary to 202.9a we should be stating reason for denial since we had enough information to make a credit decision. Just wondering if the "incomplete" should be noted as well, or if it even matters one way or the other.

Bump

The Commentary reads:
"If credit is denied, the applicant must be given the specific reasons for the credit denial (or notice of the right to receive the reasons); in this instance missing information or 'incomplete application' cannot be given as the reason for the denial."

Can I take this to mean that if we deny an incomplete application we should not also list "incomplete" as a reason as well?

It's important to consider what the Commentary says immediately before the above cite:

"When an application is missing information but provides sufficient data for a credit decision, the creditor may evaluate the application, make its credit decision, and notify the applicant accordingly."

The reason this part is important is that if you have enough information to make a decision and you make a decision, "incomplete application" cannot be a denial reason.

I'd like to add to this question.

We are a wholesale lender. We allow brokers to send us the minimal basics that we call a "skinny pack". This includes a 1003, acceptable GFE and 1008/LT/VA Loan Analysis.
Sometimes, these "skinny packs" are submitted and we accept them as a submission but they never go anywhere.

How would you handle these? I'm racking my brain on whether or not we should consider these applicaitons and if we do, would we give the 30 days and then flat out deny them for an incomplete application or do the notice of incompleteness under Reg B giving them more time and then if no response, report them as file Closed for Incompleteness?