[Gotto]

Looking for opinions on determination of Action Taken – Withdraw vs Denial when a Conditional Approval has been issued.

According to Official Interpretation 1003.4(a)(8)(i)(5) and Comment 1003.4(a)(8)(i)-13, if the applicant expressly withdraws before satisfying all underwriting or creditworthiness conditions and before the institution denies the application or closes the file for incompleteness, the institution reports the action as application withdrawn.

If the applicant expressly withdraws by indicating he/she is withdrawing because they cannot and/or is not willing to provide a creditworthiness condition(s), wouldn’t that be a denial?

If a denial, wouldn’t the denial reasons be based on all open underwriting conditions? Or denial reason for just items the applicant expressly indicated he/she cannot or not willing to provide. For example, open underwriting conditions were tax returns for income and asset statements. Applicant expressly withdraws stating he/she is not willing to provide tax returns but no mention of asset statements. Would the denial reason be both? Or just denied on basis of tax returns?
Thank you.

[rcooper]

Based on the exceprt you noted, and that I restated below, I think the applicant has technically withdrawn before you have made a decision to deny. I don’t believe you had made a decision to deny before you got notification that the applicant was withdrawing the application.

1003.4(a)(8)(i) 4. Action taken—application denied. A financial institution reports that the application was denied if it made a credit decision denying the application before an applicant withdraws the application or the file is closed for incompleteness. See comments 4(a)-2 through -4 for guidance on transactions in which more than one institution is involved.

5. Action taken—application withdrawn. A financial institution reports that the application was withdrawn when the application is expressly withdrawn by the applicant before the financial institution makes a credit decision denying the application, before the financial institution makes a credit decision approving the application, or before the file is closed for incompleteness. A financial institution also reports application withdrawn if the financial institution provides a conditional approval specifying underwriting or creditworthiness conditions, pursuant to comment 4(a)(8)(i)-13, and the application is expressly withdrawn by the applicant before the applicant satisfies all specified underwriting or creditworthiness conditions. A preapproval request that is withdrawn is not reportable under HMDA. See § 1003.4(a).

1003.(a)(8)(i) – 13 states, in part:
…If the applicant expressly withdraws before satisfying all underwriting or creditworthiness conditions and before the institution denies the application or closes the file for incompleteness, the institution reports the action taken as application withdrawn.

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