A lender denies a California borrower's mortgage application. Under ECOA and Regulation B, which statement BEST describes the lender's adverse action notice obligations?
Correct Answer
A) The lender must provide written notice within 30 days, stating the specific reasons for denial or informing the applicant of their right to request those reasons within 60 days
Under ECOA (15 U.S.C. § 1691(d)) and Regulation B (12 C.F.R. § 202.9), a lender must notify an applicant of adverse action within 30 days of receiving a completed application. The written notice must either state the specific reasons for the denial or inform the applicant of their right to request those specific reasons within 60 days of receiving the notice. Both the 30-day notification deadline and the reason-disclosure requirement are mandatory regardless of loan amount or credit score.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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