Have an unusual situation and need a little help... Applicant met underwriting standards to purchase a new townhome. The secondary market investor requires a one year warranty on all newly built properties. The builder (and seller) refuses to provide the warranty. Which action code should be used in this scenario?
Thanks.

What's happening now? Did the borrower chose to cancel the loan? Or looking for a new property? Or are you shopping a new investor? This loan is either canceled at the borrowers request or possibly incomplete if the reason it dies is because you can't get the warranty required.

The borrower has found a different property, which we lent the funds for and sold to a secondary market investor.

Did you take a new application or did you continue with the original and just put a new property on it? If the former, I'd put it on as canceled. If the latter, it's obviously an originated purchase.

Not sure I agree with this. Requiring a one year warranty is not a customary closing requirement.

A "underwriting" condition was put on the request by the investor. The applicant failed, refused or couldn't meet the condition. I think you have a denial. Review the FAQs under conditional approvals.

http://www.ffiec.gov/hmda/faqreg.htm


If a consumer reactivated an application that was approved but not accepted, denied, closed for incompleteness or withdrawn within the same calendar year the financial institution has the option to treat it as one application or two.

I stand corrected. According to the FAQ Dan linked, this would be a denial.

LO did continue original application for the second property; however, the loan for the second property closed in 2010. I am thinking we should include the first property on our 2009 LAR as a denial and the second on the 2010 LAR as a purchase.

I appreciate your input! Thanks.

As long as the application was reinstated within the same calendar year you still have the option to treat it as one application or two. See page D-9 of the GIR.


http://www.ffiec.gov/hmda/guide.htm

Thanks, Dan!