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Loan Estimate Not Provided by 3rd Business Day

Answered by: 
Randy Carey

Question: 
There are competing thoughts on the appropriate way to treat an application when the Loan Estimate is not provided by the 3rd business day following the applicant's submission of the six pieces of information. Theory 1 - Cancel the existing application and restart the application process. This may be due to some issues with selling the loan on the secondary market. Theory 2 - Show it cas a "self-identified" issue on the file and continue with the file as is. As long as it is not a pattern in practice and is just a one-off from the established controls, there should be no ramifications. Please help in identified whether #1 or #2 (or may be a 3rd option we aren't thinking of) would be the most appropriate.
Answer: 

Theory 1 - under what premise do you think that a creditor is allowed to cancel a consumer credit application because the bank failed to abide by its regulatory requirements? Nothing like setting yourself for a UDAAP finding.

Theory 2 - that is correct. You have a timing error and as long as there is not a pattern or practices, errors happen.

First published on 09/27/2020

Filed under: 
Compliance
Filed under compliance as: 
Loans
Reg. Z

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