How long do lenders typically have to notify borrowers of adverse action on a mortgage application?

Lenders are required to notify borrowers of adverse action on a mortgage application within a specific timeframe to ensure transparency and compliance with regulations. The correct time frame for adverse action notifications is 30 days. This requirement is established under the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA), which aim to protect consumers by obligating lenders to inform applicants about decisions that are unfavorable and the reasons behind those decisions.

This 30-day period allows borrowers to understand why their applications were not approved or other negative actions taken on their application, thus providing them with essential information that they can use to either improve their financial situation or address any inaccuracies in their credit reports. By requiring this notification within 30 days, the regulations promote fairness and accountability in lending practices.