Just wanted to get a consensus: A customer applies for a loan and our flood determination shows the property to be in a SFHA (A). The customer as well as their insurance dispute the zone - they say Zone X. Finally the customer indicates that they no longer want to pursue the loans and indicates a withdrawal. They were otherwise quite qualified for the credit. Is thie withdrawn - or should it somehow be denied - and if denied, for what reason?

If the action taken (approved/denied) had not been communicated to the applicant yet – Withdrawn. If the loan approval was communicated to the applicant and then they decided not to proceed it would be approved but not accepted.

Agree - It's not a HMDA reportable record so we will withdraw.

The loan approval was conditioned on the borrower obtaining flood insurance, an underwriting requirement communicated to the applicant. The applicant refused to provide the flood insurance. You have a denial for failure to purchase required insurance. You would not make the loan as applied for, no flood insurance, therefore you took adverse action and need to follow the notification requirements of 202.9.

I would also provide the insurance agent a copy of FEMA's May 2008 letter about agents are to write the policy in the most hazardous zone if there is a discrepancy, file a complaint with FEMA and the state's dept. of insurance.

I'm with Dan on this. You indicated that they would have to provide coverage for zone A, they wanted a loan with coverage appropriate for zone X. You wouldn't make the loan without coverage for zone A. You denied them credit they applied for.