What is the required timeframe to send an adverse action notice?

The required timeframe to send an adverse action notice, as per the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA), is indeed 30 days. This notice must be provided when a lender denies a loan application or takes adverse action against a borrower based on information obtained in a credit report or other evaluation criteria.

The 30-day window ensures that applicants are promptly informed about the decision, allowing them to understand the reasons behind the adverse action, seek clarification, or take steps to improve their creditworthiness. This requirement is crucial for maintaining transparency and fairness in lending practices, giving consumers the ability to address any discrepancies or improve upon their financial standing.

Understanding this timeframe is vital for compliance in the mortgage loan origination process and ensures that MLOs uphold consumer rights effectively.