I’m curious as to what process others have for getting the Reg B Appraisal Notice out to customers within 3 days of application when the application for credit is going to be denied. We have a process but our originators have to remember to actually follow it and it requires actually pulling the notice and sending it out. They are failing miserably.

Put it on your adverse action notices.

But if they don't provide the Adverse Action Notice within three days either?

We have similar problems.....we cannot add it to the adverse action notice because the notice comes from software and can't be altered. AND....not all AANs go out within 3 days.

It really DOES seem silly to send an adverse action notice along with a notice that says "you have a right to receive a copy of the appraisal".....that we're not going to obtain because we denied your loan.....oh well.

Our other problem is loans not subject to TRID...."commercial lenders" not providing the notice because they have to remember to obtain it, complete it and send it....when as everyone knows full well, "commercial" lenders think no regulations apply to rental/investment property.

We have used application packets for years and the appraisal notice is included in that packet. We did not remove it once the notice began appearing on the LE for the sole purpose to cover situations where the loan request was denied and a LE was not provided.

We could be working for the same bank! Our issues are very similar. We cannot add verbiage to our AAN because it comes from software too. I've thought maybe the notice could be provided with application packets but then our online apps won't have them AND we're at the mercy of each MLO remembering to put the notice with the packet. And to make it even more fun, our auditors insist that the notice be included in the file so they can see that we provided it. I get it, but then saying we include it with our application packets won't work at all. We have tried and tried to come up with something that could work and just when we think we have a solution...... well, let's just say we're leading the horses to water and they aren't always drinking.

Good morning, Dan. I was typing my last reply when you were offering your advice. I really pushed for your solution and include the notice no matter what in the application packets and adding that process to procedures. But as I mentioned a few moments ago, our auditors want to SEE that notice in the file.

our auditors want

Auditors can only "want" what they have support for in the laws or regulations. There is no requirement that the bank maintain a copy of what was delivered - only that you deliver a copy. Ask them where in 1002.12—Record retention that the appraisal notice is covered.

If they are external auditors tell them to go fly a kite. If they are internal auditors have a conversation with you compliance committee. If you don't have a compliance committee then discuss with senior management.

There is no requirement to maintain a copy of the notice therefore your documented procedures should suffice to show compliance. I just went through a state exam and they questioned why there were no HELOC plan disclosures in the file. I handed them an example of our HELOC application packet and that was the end of that.

the mercy of each MLO remembering to put the notice with the packet

Our packets are centrally prepared by support specialists and are provided to the loan officers.

I absolutely agree. When they first requested that it be put in the file a couple, three years ago I argued with my boss about it. I worked in audit myself for a long time until a few years ago and we considered that if procedures state that a notice required to be provided and does not require a signature says it will be provided and when that we could conclude that it was indeed provided. I argued that with my boss and he said he wanted to do what the (now) auditors wanted and include the notice in the file. I told him he was opening a huge can of worms. Just because a notice isn't scanned and put in a file doesn't mean it wasn't given to the customer.

You cannot prevent management from falling on their own sword.

For business-purpose loans for rental/investment property, more often than not, the loan officer doesn't utilize a loan application. Therefore, placing the notice in the loan application packet doesn't help.