Can someone help me understand the proper procedures for denials? We used to only look for the denial to be given within 30 days of the application. We would ensure that there was substantiating documentation for the denial and that the appropriate reasons were documented on the form. Now the regulators are looking for RESPA disclosures.

My questions are do you give any consideration to whether the application was by mail or telephone as to what initial disclosures were given?

Do you tell the LO to mail the disclosures with the adverse action notice?

Also, anything denied within the the 3 day window of the application do you only need to disclose the credit score notice?

Thanks for your help.

This isn't new, but your regulators must not have put emphasis on this in the past. I used to be an FDIC examiner and now do bank audits. If I only had 1 hour to review your bank, I would head straight to the AAN's. They tell auditors a lot more about what really happens, then loan files. Loan files are generally reviewed and scrubbed (read "disclosures get back dated") by numerous quality reviews, loan secretaries, etc. AAN's generally get shoved in a drawer and no one reviews them for compliance procedures.

Many disclosures are triggered at application or within 3 days. If the AAN isn't given before these timing triggers, they should have been given to the applicant. By reviewing the AAN's, the auditors can tell what the loan officer really knows (things are given/retained with the AAN) and what gets back dated and cleaned up by someone else (by looking at completed loan files).

You should. This would impact GMI collection and the RESPA - Servicing Disclosure.

No. They should have already been given (at application, 3rd day, etc.). Sending a disclosure with the AAN is silly and may confuse the denied applicant (i.e., "Sorry, we're not making you a loan, but if we did, here's some disclosures.")

You need to provide the FACT Act's Notice to Home Loan Applicants if you used a credit score, but you also need (as applicable) the Servicing Disclosure, CHARM's booklet/Program Disclosure, HELOC booklet and Program Disclosure, GFE, Settlement Cost booklet, Preliminary TIL, Appraisal disclosure. There's probably more, but that's what comes to my mind.

You may benefit from our Real Estate Matrix (found at the Free Downloads page of our website). The bottom of the RE Matrix is a Time Table. You must provide all applicable disclosures on this time line until you deny the applicant.

I am familiar with the timing issues of the early RESPA disclosures. In my last post I was relating to telephone and mailed in applications only. When you review such a file what would you expect to see to be compliant regarding RESPA disclosures?

Just to get things in proper perspective for example, proper procedures should be that the LO would complete the early RESPA disclosures immediately after viewing the application and prior to pulling the credit report. The RESPA disclosures would then be mailed to the potential borrower. Then once pulling the credit report and determination is made that the loan will be denied complete the AAN and Credit Score Disclosure?

So, in other words it is not acceptable in these types of applications, i.e. mail, telephone only, to not ever find the early RESPA disclosures? Government Monitoring information would not be completed and would be the only thing acceptable.

You did mention the Servicing Disclosure but that again is a early RESPA disclosure. Why wouldn't that also have been included with the other disclosures?

If you receive an application by mail or telephone, you have 3 days to provide all RESPA documents. Pull the credit report first before preparing these documents. If the credit history isn't satisfactory, deny them. Date the AAN within 3 days of receiving the application and you don't need to provide any RESPA documents.

Thank you!