Hello, when we issue TRID early disclosures along with the intent to proceed and then we never receive the intent back nor any communication from the borrower about withdrawing. Basically, they have dropped off the planet. A notice of incomplete was never sent because we never received the intent to proceed back. So we are saying this is an incomplete application and would issue a denial notice for an incomplete application. Correct? Or am I missing something here.

Sounds like that's your only option. We've added language to our early disclosure cover letter that informs the applicant if we do not get their intent to proceed by the expiration of the LE then we can consider their application closed for incompleteness and take no further action. That helps to give us an out in these situations rather than sending a denial letter.

I like it Carolina Blue. I have a few clients that issue a letter stating everything they will need. When applicable, it is sent with teh LE. The letter explains if they don't have all of these things by xxx date, the application will be considered closed for incompleteness. They also mention the intent to proceed, when applicable. This is an official NOI and informs the applicant what is needed. It's a great way to "knock out 2 birds with one stone."

Great solution Blue! I'm going to bring that up with our operations.

Great idea! Thanks everyone.

David, just to clarify.

When we mail out our early disclosures we include an intent to proceed form. We require the borrower to sign the ITP and return it. If they don't communicate or return the form by xxxx date, as specified in the letter, the loan can be close for incompleteness? And a denial does not need to be issued?

Thank you for all your help.

Not David, but you are correct - assuming your intent to proceed form complies with the requirements in 1002.9(c)(2) of Regulation B.

From 1002.9(c)(2):
"(2) Notice of incompleteness. If additional information is needed from an applicant, the creditor shall send a written notice to the applicant specifying the information needed, designating a reasonable period of time for the applicant to provide the information, and informing the applicant that failure to provide the information requested will result in no further consideration being given to the application. The creditor shall have no further obligation under this section if the applicant fails to respond within the designated time period. If the applicant supplies the requested information within the designated time period, the creditor shall take action on the application and notify the applicant in accordance with paragraph (a) of this section."

In other words, if you have provided the notice of incompleteness under Regulation B, you don't need to also provide a denial notice if you never hear from the applicant again.

Adam confirmed for me. That's what I'm saying.

You didn't deny them, so you don't need to send them a denial. You do need to send them a notification (a Notice of Incompleteness, in this case).

In our letter to the borrower, we do give a date to return the documents by. However, it does not state that if we do not receive the forms back we will give the loan of further consideration. So we would send out a decline for an incomplete application.

I think you've got it. If you do not comply with the notice of incompleteness requirements of 1002.9(c)(2), then, yes, you should send an adverse action notice to them with the denial reason of incomplete application (unless you evaluate their application and there is another denial reason, such as credit). Your other option, going forward, is to adjust your letter to comply with 1002.9(c)(2) so that you technically provide them a notice of incompleteness.

For reference, the citation for the requirement to send a denial notice for an incomplete application (where you don't provide the notice of incompleteness) is found in 1002.9(a)(ii) as follows:

(a) Notification of action taken, ECOA notice, and statement of specific reasons. (1) When notification is required. A creditor shall notify an applicant of action taken within:

(ii) 30 days after taking adverse action on an incomplete application, unless notice is provided in accordance with paragraph (c) of this section;

The commentary expands on this:
3. Incomplete application—denial for incompleteness. When an application is incomplete regarding information that the applicant can provide and the creditor lacks sufficient data for a credit decision, the creditor may deny the application giving as the reason for denial that the application is incomplete. The creditor has the option, alternatively, of providing a notice of incompleteness under §1002.9(c).

4. Incomplete application—denial for reasons other than incompleteness. 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. 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.