Lender is requiring the customer to get a survey, but the customer doesn't want to due to cost. Since we won't do the loan without it, I think this is denial. The requirement of the lender I don't think necessarily meets what HMDA says regarding conditional approvals because that has to do with acceptable survey - in this case, the customer won't even agree to get a survey let alone an acceptable one.

Do you agree we have to send a denial, or do you think this is withdrawn?

This is a denial. This is not a withdrawal. The customer is "withdrawing" their request because you are denying them.

It depends on the situation for sending a denial. Is this a commercial customer (an entity)? If so, is their income for the past year over $1M? If yes, you don't have to send out a denial. I'd highly suggest a memo to the file though.

If this is not the case, send a denial.

This would be the same thing as requiring a Tax Return or a PFS and the borrower refuses. You have certain underwriting standards that you have to follow to be able to lend. If your customer refuses and you are not able to proceed with their loan request, you must deny.

Please someone correct me if I'm wrong. I'm up for anyone else's opinion.

It depends.

If a survey is required for all loans of this type, then send a notice of incompleteness noting that this is required to make a decision. If there is something about this particular loan that made the underwriter say, "I can't approve this loan the in the condition it's in, but will reconsider if I also have a survey." (or something along those lines), then you have a decline.

My 2 cents.

That survey may be necessary for flood and for a title policy. Depends.

But if you said the loan is denied sans survey, that decision was made prior to any withdrawal. The denial form allows you to explain what was needed. I'd just send the denial. (Separate note, if the application is this much of a problem, you're better off without the loan.)