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#1688270 - 04/12/12 03:44 PM Withdrawn or Denied
Bluesfan57 Offline
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Joined: Feb 2011
Posts: 155
Peak 10 Breck, CO
i am reviewing some adverse action loans. i have come across two loans that were withdrawn by the borrowers per LO notes. looking through the file i find a complete 1008 (UW approval/denial form) that the UW states it is denied. moving down this 1008, UW notes section says "file was withdrawn before being underwritten" however we finaled it out as a denial because credit score didnt meet guidelines or collateral was insufficient.

what do you do in these cases? report as denial or withdrawn?

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#1688281 - 04/12/12 03:52 PM Re: Withdrawn or Denied Bluesfan57
Pickles Offline
Gold Star
Joined: Apr 2006
Posts: 275
Beach Bum, East Coast, USA
UW reviewed the credit & it didn't meet their criteria. Sounds like it should be a denial and adverse action should be provided.
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#1688285 - 04/12/12 03:55 PM Re: Withdrawn or Denied Bluesfan57
Bluesfan57 Offline
100 Club
Joined: Feb 2011
Posts: 155
Peak 10 Breck, CO
thats exactly what we do.

i just dont like on UW form (1008) in the notes section it says it was never underwritten. yet we signed it denied.

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#1688302 - 04/12/12 04:04 PM Re: Withdrawn or Denied Bluesfan57
Pickles Offline
Gold Star
Joined: Apr 2006
Posts: 275
Beach Bum, East Coast, USA
I agree and IMO the UW is attempting to mess 2 processes into one or is using an extremely poor choice of wording on the 1008 form, but at least the correct action was taken by providing the adverse action notice.
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#1688304 - 04/12/12 04:09 PM Re: Withdrawn or Denied Bluesfan57
Bluesfan57 Offline
100 Club
Joined: Feb 2011
Posts: 155
Peak 10 Breck, CO
yea i think i was just wanting to voice my frustration more than anything.

thx

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#1688779 - 04/13/12 07:05 PM Re: Withdrawn or Denied Bluesfan57
Rocky P Online
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Joined: Jun 2003
Posts: 7,650
Florida
A few years ago, a mega-stockbroker used a 3rd party to underwrite loans. The financial adviser would get the mortgage company on the phone with the customer, then get permission to act on behalf of the customer. Many times, there would be issues, such as credit, collateral value, etc. which was relayed to the financial consultant. Rather than 'offending” their 7-8 figure client with a denial and adverse action, the financial adviser would “withdraw” the loan on the customer's behalf.

All was well and good until the regulator (FDIC) noticed that the withdrawals were higher than normal. After looking at some of the files, they ordered a file search, going back 25 months. After sample reviews of impacted loans by the regulators, and in addition to a healthy fine, FDIC required that where there was sufficient information for a denial, that each of those customers get an adverse action notice.

Direct and indirect cost – huge,
Customer ill-will in receiving an AAN after the financial adviser gave them a story – huge,
Reputational loss with the examiners – even worse.
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