Bank receives mortgage loan application but is unable to make loan (credit problems). Bank sends app to investor who also rejects the applicant. Does the 30 day clock to send the adverse action begin the date the bank had a complete application or the date the app was sent to the investor?

Our secondary market transactions close in the bank's name so we would not start the clock until both the secondary market investor and the bank had made the decision to deny the loan. It may be different if your loans sold to investors close in their name.

IMO, I believe that the 30 day clock would start when the bank received a completed application, as the bank was a creditor and in a position to make a credit decision independent of the investor.

Come to think about it, I like Jax's answer better than mine. It doesn't matter how many decisions are made or what they are, the clock starts when a complete application is received. I need to head over to Mr. C's.

I'm going to reverse positions on you by playing historian. The reason for the 30-day clock was to ensure that the creditor didn't allow the application to languish but was given opportunity to work with or through third parties who might not come through in time. The big example when the regulation was being written was FHA who often took 8 weeks to respond. The FRB invented the concept of "completed application" to provide a realistic starting time for the clock.

The simple version of the definition is that an application is complete when you know enough to make a decision. This can be very early -- when you see that they have just come from bankruptcy court -- or very late -- when FHA or another investor finally gives you their answer.

In this situation, you are taking the application through a variety of steps to find a way to make the loan. For that reason, I think the investor's answer is what completes your application. If you handled the situation in reverse, first getting a denial from the investor and then deciding whether to make and portfolio the loan, the answer would be the same. When the investor said no, you had a completed application to work with because you knew what kind of loan you were being asked to make.

I am pretty dizzy now Lucy. A question that seemed easy enough suddenly has taken on shades of grey. The original poster has quite a bit of info to digest. Best of luck.

Original Poster here: I agree with Lucy, but the problem is - will the internal auditor asking about this agree.

My I/A just asked me the same question, and as I understand it, an application is deemed complete when we have all of the info to make a credit decision (tax returns, pay stubs, application, etc.) and that the 30 day clock starts when I have all of that info.
My question is, where can I find the absolute definition of a "completed application"??
Thanks...

Look at Reg. B 202.2(f) and then the OSC 202.2(f)(5).

Now why the heck didn't I see that? As always Dan, thanks!

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