While doing a review at one of our banks new branches I noticed that on several of the adverse action notices that the lender had verbally notified the customer of adverse action within 3 days but did not send the Adverse Action notice for approximately 5 -7 days. I reviewed Reg B 202.9 in regard to notifications. I want to make sure that this is an acceptable practice and that we are not out of compliance for not providing (re: GFE, Home Equity brochure etc.) since the notice was given verbally but the written notice was sent after the 3 days. Any insight would be appreciated.

Oral notices qualify under some business, telephonic and small volume lender scenarios. Otherwise, a written notice is required under .9(a)(2) to communicate an adverse action.

But your question relates to not providing early disclosures under "Z" and RESPA. We have generalized this rule to say that if you deny it in the 3 days period, no notice disclosure ("Z"/RESPA) is needed. Don't read the technical "B" definition/requirement into this. I think there is sufficient room for interpretation that you are OK.

Look at the commentary and you'll see that it doesn't refer to a formal adverse action notice.

4. Exceptions. The creditor may determine within the 3-day period that the application will not or cannot be approved on the terms requested, as, for example, when a consumer applies for a type or amount of credit that the creditor does not offer, or the consumer’s application cannot be approved for some other reason. In that case, the creditor need not make the disclosures under this section. If the creditor fails to provide early disclosures and the transaction is later consummated on the original terms, the creditor will be in violation of this provision. If, however, the consumer amends the application because of the creditor’s unwillingness to approve it on its original terms, no violation occurs for not providing disclosures based on the original terms. But a new application subject to this section.

Thank you Andy - I need to make sure that I review both the Reg & the commentary from now on.

Andy's right (as usual!) The disclosures are supposed to be given in 3 days, unless denial is made before that time frame is up. But the adverse action notice must be sent within 30 days of denial.

Especially since the commentary is where the good stuff usually is!!

Good stuff????? You mean there is GOOD stuff in the Commentary? WOW!!!!!!!!!

You wrote: I want to make sure that this is an acceptable practice and that we are not out of compliance for not providing (re: GFE, Home Equity brochure etc.) since the notice was given verbally but the written notice was sent after the 3 days. Any insight would be appreciated......
My insight is this - You mentioned "Home Equity Brochure" and "GFE" so I am assuming you a talking about denying a Home Equity LINE OF CREDIT loan request. The Home Equity Brochure and HELOC Plan Disclosure (containing estimated closing costs) must be given at the time you provide the HELOC applications to the consumer.