How long must mortgage lenders maintain adverse action documentation according to the FCRA?

Mortgage lenders are required to maintain adverse action documentation for a period of three years after the adverse action notice has been issued. This time frame is established by the Fair Credit Reporting Act (FCRA), which mandates that lenders keep records related to adverse actions taken based on information in a consumer’s credit report or other related assessments.

The rationale behind this requirement is to ensure that consumers have the opportunity to dispute or understand the reasons for any actions that might adversely affect their ability to secure credit. Retaining documentation for three years allows lenders to provide necessary records in the event of audits or inquiries by regulatory bodies, and it provides a safeguard for borrowers seeking to verify the accuracy of their credit data or the adverse decisions rendered against them.

This three-year period is consistent with the legal framework surrounding consumer rights in credit reporting and underscores the importance of transparency in lending practices.