Reg B - Completed Applications

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Question:

ECOA/Reg B has certain time frames in which we are required to notify applicants of our decision. What I am unclear about is how ECOA defines a completed application. Is it one in which all requested conditions have been received as opposed to receipt of a completed form 1003? Is the period for making a decision on a loan based upon the date the borrower applied or based upon the date all conditions were received for review? The Reg B Notice of Incompleteness references the inability to make a credit decision. Does Reg B require receipt of all required conditions before a credit approval can be made?

Answer:

Reg B defines both an "application" and a "completed application" in section 202.2(f). I'd first recommend that you go review this section and the applicable Official Staff Commentary. You should also review the notice requirements in 202.9, especially for incomplete applications which are covered in 202.9(c).

Your institution has the flexibility to determine what your application procedures are and what you consider to be an application. Several disclosure requirements key off of date of application, so this is an important date. But the Reg B decision clock keys from date of completed application. Again, the definition of completed application is both institution and credit type specific, because it is of the information you regulary obtain and consider for the amount and type of credit requested. Once you have an application, the lender is obligated to exercise reasonable diligence in obtaining all of the information required to make it a completed application. If you don't have all the information for a completed application within 30 days of the application date, you've got to either send an adverse action notice in accordance with 202.9(a) or a notice of incompleteness in accordance with 202.9(c)(2). If you give the notice of incompleteness in accordance with 202.9(c)(2), you don't have any further adverse action notice requirements if the requested information is not provided.

As to your second question: remembering that a completed application is all the information that you regularly obtain and evaluate, the instances where you are able to make a credit decision without that information should be rare. If, however, you can make the credit decision without a particular piece of information that is included in your defintion of "completed application," you are permitted to do so and should notify the applicant accordingly.

First published on BankersOnline.com 6/22/09