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Notice of Incompleteness- Information Request

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Question: 
Our commercial applicant submitted an application and we issued a (expression of interest) EOI / Term sheet. The loan officer is in communication with them and is asking for items we require to underwrite the loan. It is taking more than 60 days to receive all the items. They are coming in piece by piece. When are we required to send a notice of incompleteness? I was understanding that an NOIA would not be required since the application is still not complete and we are working with the applicant, but others are saying it should be sent now.
Answer: 

You have an application, but not a complete application. If you have an application, but not everything you need from the applicant, you need to send a Notice of Incompleteness (NOI) within 30 days after receiving an application. See §1002.9(c)(1) & (2):

(1) Notice alternatives. Within 30 days after receiving an application that is incomplete regarding matters that an applicant can complete, the creditor shall notify the applicant either:
(i) Of action taken, in accordance with paragraph (a) of this section; or

(ii) Of the incompleteness, in accordance with paragraph (c)(2) of this section.

(2) Notice of incompleteness. If additional information is needed from an applicant, the creditor shall send a written notice to the applicant specifying the information needed, designating a reasonable period of time for the applicant to provide the information, and informing the applicant that failure to provide the information requested will result in no further consideration being given to the application. The creditor shall have no further obligation under this section if the applicant fails to respond within the designated time period. If the applicant supplies the requested information within the designated time period, the creditor shall take action on the application and notify the applicant in accordance with paragraph (a) of this section.

It's common that loan officers will verbally request info, but you still have to send a NOI if you don't get what you need:
(3) Oral request for information. At its option, a creditor may inform the applicant orally of the need for additional information. If the application remains incomplete the creditor shall send a notice in accordance with paragraph (c)(1) of this section.

First published on 11/03/2019

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