For RESPA- if a property has not been identified, then it is not considered an "application" and the 3 days do not start to run. Does it violate any other compliance time frame/rule if we use the RESPA definiton of the application date.

You can't use the RESPA definition of "application" for any regulation other than RESPA. For instance, Reg B (ECO) indicates you have an application when you have a request for credit (that's a short paraphrase). You don't need a property to have a Reg B application.

To add to David's point. Once you have an application per Reg B (even if it's not an application for RESPA or Reg Z) you need to make a credit decision and communicate it to the consumer within 30 days unless you issue a notice of incompletess per Reg B.

Here's the "official" regulatory viewpoint.

Q: When do you have an application?

A. When you have one.

(Don't argue, just accept.)

On Reg B- what if you need an appraisal to make your decision and it is taking more than 30 days from the first contact to get it. Since it is not a case of the customer needing to supply the information the Notice of Incomplete Application would not apply.

An appraisal is a verification document. It's something you order AFTER you have an application. You can't say you don't have an application until after you verify everything. They apply, then you verify.

The 30 day clock stops when you say "yes, we'll make this loan, assuming everything checks out." Then you verify the information (title, appraisal, verifications, etc.).

I highly recommend you order the "Applications" webinar I conducted. It's 2 hours of training on this exact topic. This is an extremely important topic. The CD-ROM includes the materials, Power Point and all of the Q&A's generated during the webinar. You can find it here:
http://www.bankersonline.com/store/product_info.php?products_id=1103

You also have an application, a declined one, as soon as you say no regardless of how much information you have obtained, subject to limited exceptions.

I think David's point is that you've met your 30 day requirement under Reg B when you send a conditional approval.

But what happens in the following situation:
You issue the conditional approval on day 5 and wait for the appraisal. You receive the appraisal on day 31 and see that the appraised value is too low so you notify the borrower that the loan is denied.

- Have you still met the Reg B 30-day requirement based on the conditional approval on day 5, or are you out of compliance because the final decision was on day 31?

- What do you report for HMDA as your action date? Is it day 5 for the initial credit decision, or day 31 for the final credit decision?

Doesn't this give you more leeway as far as when the 30 days starts to run:

Under 202.9
9a
1. Timing of notice—when an application is complete. Once a creditor has obtained all the information it normally considers in making a credit decision, the application is complete and the creditor has 30 days in which to notify the applicant of the credit decision. (See also comment 2(f)-6.)

I thought the only time the 30 days could be extended was if the application was incomplete and the potential customer has been notified of the information required along with a time frame within which to provide it. I do not believe the 30 days can be extended for verification on the bank's end.

Section 202.9(c) basically says you need to communicate your credit decision within 30 days of receiving an application, but if the application is incomplete with regard to something that can be provided by the consumer then, as Nanwa said, you can send a notice of incompleteness to give you more time.

So then, I'd like to raise my earlier question again. What happens if we issue the conditional approval on day 5, can't send a notice of incompleteness for an appraisal, the appraisal shows up on day 31 and we deny it?

- Was my credit decision for Reg B really on day 5 or day 31?
- Since my HMDA action date is day 31, do I have a problem if it's not the same as my reg B date of credit decision?

We've always followed the Commentary to Reg. B (202.2f) when classifying a client's requests for information, that may not be an application initially. Either we treat them as an 1)Inquiry - which we define as a request about the general lending practices of the bank; for example, debt ratio guidelines and loan-to-value standards (we don't consider this an application); or a 2) Preapproval or conditional approval. Our definition for preapproval (or conditioanl approval) is having collected the information we normally collect to make a credit decision with exception of the property or vehicle to be purchased. We consider these to be applications under Reg. B. As an aside, we generally don't offer pre-qualifications, which fall between inquiries and preapprovals (and, under Reg. B, are not applications).

The important things to remember are:
- Although inquiry (or pre-qualification) is not an application under Reg. B, an inquiry can become an application depending upon a loan officer's response. If the L/O's response to a question about loan-to-value requirements is "From the way you're dressed, I wouldn't lend you dime" - perhaps a bit rediculous, but I've seen similar things happen - (as Kaybee mentioned) a simple inquiry has become an application and is subject to adverse action notification requirements.

- Treat all applicants as equally as (reasonably) possible (including requesting information from third parties). The Commentary addresses third party information at 202.2(f) 6 "Completed application—diligence requirement." The key, don't wait to order third-party info until day 29 for applicants residing in low-income geographies while you order informaiton immediatley for applicants residing in upper-income geographies. You could defend the 31-day scenario described above by Will B if you have good procedures and follow them (for HMDA, you could use either date, but you must be consistent throughout the LAR).

Merely my opinion, but I've been there.