In which situation would a RESPA early disclosure not be needed?

The situation in which a RESPA early disclosure would not be needed occurs when the loan is denied within 3 business days. Under the Real Estate Settlement Procedures Act (RESPA), lenders are required to provide various disclosures, including the Loan Estimate, to applicants within a specific timeframe. However, if a loan application is denied during this initial period, the requirement for these disclosures is negated since the application will not proceed to closing.

Therefore, when a lender assesses an application and determines that it does not meet their criteria for approval within 3 business days, they are relieved of the obligation to provide early disclosures to the borrower. This is primarily because the purpose of these disclosures is to inform borrowers about the terms and costs associated with the mortgage, which becomes irrelevant if the loan is not approved. In other scenarios, such as if the loan is processed after closing or if the applicant withdraws their application, the lender still has to account for the disclosure requirements in other ways related to ongoing transactions.