Denial Adverse Action Notice 2026: What MLOs Must Send and When

When a lender denies a mortgage application, takes a counteroffer action, or the borrower withdraws after a denial, an adverse action notice (AAN) must be provided. ECOA and the FCRA both impose requirements for adverse action notices. A lender that gets this wrong faces regulatory exposure and litigation risk.

Timing Requirements

• ✦ECOA: adverse action notice must be provided within 30 days of receiving a complete application.
• ✦FCRA: if the denial was based on a credit report, the notice must be provided promptly; 30 days is treated as the safe harbor.
• ✦For an incomplete application, the lender must notify the applicant within 30 days, either with a notice of incompleteness or a denial if the file will not proceed.

Required Content Under ECOA

• ✦A statement of action taken (denied, counteroffer, or incomplete).
• ✦The ECOA statement of rights.
• ✦Name and address of the federal agency regulating compliance.
• ✦Specific reasons for the action taken, or disclosure of the right to request specific reasons within 60 days.

Required Content Under FCRA

• ✦Name and address of the consumer reporting agency that provided the report.
• ✦Statement that the CRA did not make the decision and cannot explain why.
• ✦Right to a free copy of the report within 60 days.
• ✦Right to dispute the accuracy of the report with the CRA.

Common AAN Errors

Generic reason codes that do not specifically match the actual denial reason are the most common error. Sending the notice after the 30-day window is the second most common. Failing to include FCRA information when credit was pulled, or not providing any notice at all when the borrower withdraws after the lender has already made an internal credit decision, are both violations.