we have a discussion going on. A consumer applied for a loan to purchase an auto fully secured by a CD. We prepared the CD documents and did not pull a credit report. The borrower never came in to sign, open CD, or contact us regarding the loan so we are closing the application. LO has left a message, no response. Since it was approved based on the CD seems like a denial since we wouldn't make the loan without the CD and the CD was not opened. However it was submitted as a withdrawal since the customer made no further contact. thoughts?

You approved a loan to be secured by a CD. The customer did not act on the approval...by not opening the CD. Under Reg B, that is a withdrawal in my opinion.

I also believe it is a withdrawal, from 202.9:
(e) Withdrawal of approved application. When an applicant submits an application and the parties contemplate that the applicant will inquire about its status, if the creditor approves the application and the applicant has not inquired within 30 days after applying, the creditor may treat the application as withdrawn and need not comply with paragraph (a)(1) of this section.

A consumer applied for a loan to purchase an auto fully secured by a CD. . . . . Since it was approved based on the CD seems like a denial since we wouldn't make the loan without the CD

I'm not sure exactly what happened here.

1. The consumer applied for a loan volunteering to open a CD and secure the loan with it.

2. The consumer applied for a loan, didn't qualify and was counter offered to open a CD and secure the loan with it. IOWs the CD was a underwriting condition placed by the bank.

If #1 I agree it's an approved but not accepted and no further action is required.

If #2 you have a denial and need to send an AAN.

The consumer applied for a loan volunteering to open a CD and secure the loan with it.

thanks for the feedback

Think HMDA. I use the HMDA definitions for all applications and would have closed this application as Approved, not Accepted. From a Fair Lending perspective, an Auditor or Regulator should lump these with Originated, not with Denied if comparing approved to denied.

Al