What type of document can be automatically generated to handle declines and withdrawals?

The adverse action document is designed specifically for situations where a loan application has been declined or a withdrawal of an application occurs. This document serves the purpose of formally notifying the applicant of the decision and provides necessary information about the reasons for the adverse action in compliance with regulations such as the Equal Credit Opportunity Act (ECOA).

Generating this document automatically helps ensure that banks and financial institutions maintain compliance while also streamlining the communication process with applicants. It allows the institution to clearly convey adverse decisions, which is essential for maintaining transparency and fostering trust between the bank and the applicant.

In contrast, the loan application document is typically used to collect information from the applicant and initiate the loan process, while the approval letter confirms that a loan application has been accepted. A modification agreement relates to changes made to an existing loan and does not pertain to declines or withdrawals. Therefore, the adverse action document is the most relevant and correct choice for handling declines and withdrawals in the context provided.