Applicant request loan to purchase primary residence. We approve but borrower states he has received a better rate and will secure the financing elsewhere.

For HMDA action taken would this be considered a
Code # 2 approved but not accepted?

It would be an approved but not accepted.

That is what I thought until I read code # 2 again. It states the following," Code 2-Application approved but not accepted is used when an applicant is approved but the applicant, loan broker, or correspondent fails to respond to notification of approval or commitment letter within the specified time.

In this situation the applicant did respond and say he had received a better rate so by definition Code # 2 would not apply.

It was not originated because no loan was booked.

It was not declined.

It cannot be coded as withdrawn because the bank had made and communicated a credit decision. From the instructions on withdrawn: d. Use Code 4 only when the application is expressly withdrawn by the applicant before a credit decision is made. Do not use Code 4 if a request for preapproval is withdrawn; preapproval requests that are withdrawn are not reported under HMDA.

It cannot be closed for incompleteness.

Nor can it be purchased or any code having to do with a preapproval.

The only possible code is approved not accepted. They did not accept the approval by going head with the approved loan. No loan was originated.