West Virginia Mortgage Law Practice Test

When a mortgage loan is declined, within how many days must the lender provide the applicant with an Adverse Action Notice?

1. 10 days

2. 15 days

3. 20 days

4. 30 days

The correct answer is: 10 days

The correct timeframe for a lender to provide an Adverse Action Notice after declining a mortgage loan application is within 30 days. This requirement is set forth by the Equal Credit Opportunity Act (ECOA), which mandates that lenders inform applicants of denials and the reasons for those denials in a timely manner to ensure transparency and fairness in the lending process. In this context, while you selected the option for 10 days, it's important to note that the requirement is actually 30 days. This allows the lender sufficient time to process the decision and properly inform the applicant about the status of their loan application, which includes reasons for the adverse action taken. By adhering to this 30-day timeframe, lenders remain compliant with federal regulations designed to protect consumers during the lending process.