We recently had our 3rd party vendor send out LE's outside of the 3 business days. The LE went out between the 4th and 6th day. I was treating this as a timing violation, however, it was mentioned that if the LE was not sent timely, these loans should be treated as no cost loans. I'm wondering what other banks are doing. Does anyone know if there is a point of reference that these should be treated as no cost.

There is nothing in the regulation that indicates that a timing violation when delivering the LE results in a free loan. Does it create other potential liabilities? - sure. If you choose to go that route, make sure you take advantage of the warranties that your 3rd party vendor provides you. If this is more than a one-off situation, I suggest looking for a new vendor.