Customer comes in with loan app for X amount of dollars. The appraisal comes in low so the customer would like to drop the loan amount to avoid the PMI. Then in the course of the loan they decide not to go through with it altogether. Would this be an ANA or denial. I am leaning toward ANA since the bank didn't counteroffer, it was the customer's decision to drop the loan amount. We would have closed the loan with the original terms. Am I thinking the right way about this?

If the loan was approved with the new lower amount, I'd lean to ANA as well.

So, the Bank was prepared to make the higher amount that was orginally applied for? Just with PMI?

Correct, we would have closed the loan with the higher loan amount with PMI. The customer requested that we lower the loan amount which we did have on the documentation but then they decided not to go through with it because they didn't want to bring in the funds to close.

I would report the original amount applied for and approved and not the lower amount.

Didn't even think of that aspect of reporting the original amount! Thank you all for your responses.