A creditor receives a consumer mortgage application on April 2, missing tax returns the applicant can provide. This is not a preapproval request, and no notification exception applies. After the full 30-day period has expired, the creditor has neither notified the applicant of action taken nor provided a notice of incompleteness. Has it complied with Regulation B?
Correct Answer
C) No: it must provide an applicable action notice or a compliant notice of incompleteness within 30 days
C. Remaining silent after the applicable period is not compliant. For missing information the applicant can supply, the rule provides notification alternatives rather than an indefinite pause. A written incompleteness notice identifies the missing information, allows a reasonable response period and explains the consequence of not responding. Scope and exceptions: The revised facts exclude preapproval and notification exceptions. An oral request does not excuse the required subsequent notice when incompleteness continues. Source: 1002.9(c)(1)–(3) — https://www.consumerfinance.gov/rules-policy/regulations/1002/9/
Why This Is the Correct Answer
C. Remaining silent after the applicable period is not compliant. For missing information the applicant can supply, the rule provides notification alternatives rather than an indefinite pause. A written incompleteness notice identifies the missing information, allows a reasonable response period and explains the consequence of not responding. Scope and exceptions: The revised facts exclude preapproval and notification exceptions. An oral request does not excuse the required subsequent notice when incompleteness continues.
Why the Other Options Are Wrong
Option A: Compliant, since the applicant already knows the returns are outstanding
The applicant’s awareness does not substitute for notification.
Option B: Compliant: the 30-day clock does not begin until the file is complete
An incomplete application has its own notice requirement.
Option D: Non-compliant: an incomplete application must be denied within 30 days
Denial is not the only permissible response.
Exam Tip
Incomplete does not mean the notification clock is indefinitely stopped.
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