Is an adverse action notice required when a loan modification is denied?

I would take a look at the Official Staff Commentary for Regulation B:

2(c) Adverse action.
Paragraph 2(c)(1)(i)
1. Application for credit. If the applicant applied in accordance with the creditor’s procedures, a refusal to refinance or extend the term of a business or other loan is adverse action.

Hope this helps...

I would also look at the Federal Reserve's CA 09-13 http://www.federalreserve.gov/boarddocs/caletters/2009/0913/caltr0913.htm, which gives more detail on this. Basically, if the loan is not delinquent when the modification is requested, an adverse action notice is required.