When must a lender advise loan applicants about the status of their application?

The requirement for lenders to inform loan applicants about the status of their application within 30 days is grounded in the regulations established under the Equal Credit Opportunity Act (ECOA) and the Home Mortgage Disclosure Act (HMDA). These regulations aim to ensure that borrowers are kept informed about their mortgage applications, which is a fundamental aspect of fair lending practices and consumer protection.

When a lender receives a completed application, they are obligated to notify the applicant of the status of that application within 30 days, whether the application is approved, denied, or if additional information is needed. This timeline allows applicants to understand where they stand in the process, which is critical for planning and making informed decisions regarding their housing and financial options.

This timeframe is designed to promote transparency and help prevent discriminatory practices in lending, ensuring that applicants are treated fairly and equitably. Being informed in a timely manner supports the overall integrity of the lending process and helps establish trust between lenders and borrowers.