I have been working as a dispute investigator for several years so I am a little embarrassed to be asking this question. After all the webinars and information I've read in regard to the requirements of an initial letter, I cannot locate in the actual Regulation where it states this. I've always thought that an "initial" letter needed to be sent to the customer within 2 business days of the customer notifying the bank of their error. Where in the Reg does it state this or have I been dreaming this up?

It's not in the Reg. It's probably a policy/procedure decision made by management. You work with those long enough and they tend to take on the gravitas of a regulatory requirement.

John is correct. It's a good practice to put all correspondence in writing, but the only written requirement is the "We investigated and find no error" [§1005.11(d)(1)].