What must a lender provide to a customer if their loan application is denied?

When a loan application is denied, it is required that the lender provide a written statement within 30 days. This regulation is in place to ensure that customers are treated fairly and are informed about the reasons their loan was not approved. The written statement typically includes the specific reasons for the denial as well as information on the customer's rights regarding their credit report.

This written communication gives customers the opportunity to understand and address any issues that may have led to the denial and to improve their creditworthiness for future applications. This requirement is part of the Equal Credit Opportunity Act (ECOA) and fair lending practices, which aim to promote transparency and fairness in the borrowing process.

Other options do not fulfill the regulatory requirements: a verbal explanation does not provide the necessary documentation for the customer, a list of alternative lenders is not a standard requirement, and guaranteeing a future application goes against the principles of lending by creating unrealistic expectations.