In a recent audit, one of the findings was "Untimely Delivery of Notice to Borrower About Special Flood Hazard Area Status". In this case, the required letter and Notice to Borrower was mailed out on December 11th. The loan closed on December 30th. I thought that documents mailed out were considered "delivered" within 3 days from day of mailing. Is this accurate? Also, the customer brought the Notice to the closing and signed it at that time and dated it the 30th. Is there a problem with this if we can prove the Notice was mailed in a timely manner?

We have been told to allow 10 days prior to closing. We mail ours to the borrower with a return receipt so that we know they have received it.

There is only two ways to document delivery of the flood notice. A delivery receipt or a dated signature on the form itself. Just mailing it has never been acceptable.

In this case, the required letter and Notice to Borrower was mailed out on December 11th. The loan closed on December 30th.

When I read this I was about to tell you to get a new auditor then I read this;

the customer brought the Notice to the closing and signed it at that time and dated it the 30th.

So according to your documentation and the customer's acknowledgment he did not receive the notice until the day of closing therefore I would agree with the untimely notice citation.

Is there a problem with this if we can prove the Notice was mailed in a timely manner?

Proving you mailed the notice is a timely manner is not the issue. You have to document by the customer's acknowledgment that they received it in a timely manner.

We also mail the notice certified with a return receipt requested. This gives a good paper trail of when the notice was received by the borrower.

Thank you all so much for your help! Your time is very much appreciated.

Here's the regulatory requirements and Guidance on the Notice timing (emphasis added):
1. Prior to Closing:
Must be delivered to the borrower(s) and to the servicer if applicable, within a “reasonable time”, before the completion of the loan. [§339.9(c)]

2. Reasonable Time:
The regulations do not establish a fixed time period in which a lender must provide the notice. What constitutes a reasonable time will necessarily vary according to the circumstances of the particular transaction. [MPFIG – page 34 and Federal Register /Vol. 74, No 138 – page 35930]

3. Regulatory Guidance:
The Agencies generally continue to regard ten days as a “reasonable” time interval.
[Federal Register /Vol. 74, No 138 – page 35930]

Dan's right. You delivered in a reasonable time, but you don't have the documentation to prove it. I always recommend YOU date the form when you mail it and just ask them to sign it. When they don't (rarely do they sign and return it or bring the copy you sent to closing), you whip out your copy of the dated Notice and have them sign it.

The alternative is to keep a copy of the letter sent with the Notice (dated, of course) to prove when it was mailed.