How would you report action taken on this:

Applicant applies for $80k refinance loan based on thinking his home is valued at $100k. Credit and income are fine but appraisal comes back at $90k so LO says we can proceed with loan but need PMI or can lower loan amount to $72k. Borrower decides to not proceed with loan request. LO marks the file "withdrawn" (which I know isn't the right action taken for HMDA but that's a whole other issue )

Non accepted counteroffers are reported as a denial.

I'd treat it as a denial. He requested $80k, you countered with $72k or PMI.

That's what I thought but I wasn't sure since we "could" have given him the original amount but needed PMI if that changed things. Thanks for the response.

These will help you understand:

If an institution makes a counteroffer to lend on terms different from the applicant's initial request (for example, for a shorter loan maturity or in a different amount) and the applicant does not accept the counteroffer or fails to respond, the institution reports the action taken as a denial on the original terms requested by the applicant. [Commentary to §1003.4(a)(8) #1]

If the borrower has supplied… information the lender requires for a credit decision and the lender denies the application or extends a counter-offer that the borrower does not accept, use the code for "application denied." [HMDA FAQ – Action Taken]

If an institution issues a loan approval subject to the applicant's meeting underwriting conditions (other than customary loan commitment or loan-closing conditions, such as a clear-title requirement or an acceptable property survey) and the applicant does not meet them, the institution reports the action taken as a denial. [Commentary to §1003.4(a)(8) #4]

For example, if approval is conditioned on a satisfactory appraisal and, despite notice of the need for an appraisal, the applicant declines to obtain an appraisal or does not respond to the lender's notice, then the application should be coded "file closed for incompleteness." If, on the other hand, the applicant obtains an appraisal but the appraisal does not support the assumed loan-to-value ratio and the lender is therefore not willing to extend the loan amount sought, then the lender must use the code for "application denied." [HMDA FAQ – Action Taken]

Just to add to this discussion, I have a situation similar to raiders original post. Counter offer was made to the individual borrower based on a low appraisal. It is clearly documented in our loan file that our client accepted and wanted to proceed with the counter offer. As the request proceeded, the individual borrower decided to create an LLC and there was a new request created for the reduced amount which was approved again and closed.

At what point does the "counter offer" actually become a revised loan amount? It would seem that when the client accepts the counter offer and the loan doesn't close for reasons unrelated to why the counter was offered, it would be an Approved But Not Accepted scenario.

Can someone weigh in on this situation?

I see your scenario as simply an amended application (went from being to an individual to an LLC)....i'd report this ONCE (the closed loan), but i would not report any denial.

I think this thread answers my question, but if you don't mind the added scenario. The applicant submitted an application for an amount....which turned out to be the full price of the house.....'course we'll only lend a percentage of that and so a GFE and Prelim were delivered for the percentage amount bank policy allows.

Subsequently, applicant refused to respond to the loan officer.

So this is a rejected counteroffer, therefore a denial?

On the other hand, the lender DID visit with the applicant prior to sending the disclosures....so it seems customer DID accept the counteroffer, but then withdrew, though not "expressly"....just wouldn't return bank's calls.

I'm so confused.

Where was a counteroffer made?

The applicant apparently did not give their intent to proceed.

If the cover letter, if any, sent with the earlies did not specify a date to respond by or no further action would be taken then you have a denial for an incomplete application. You would also report the amount applied for by the applicant, not the adjusted amount disclosed by the loan officer.

The letter that accompanied the prelims did not give a deadline for response.....only "if you intend to proceed, please sign and return these disclosures." The deadline date is on the GFE.

What deadline date is on the GFE? If you are referring to the 10 business days for how long the fees and terms are good for that is not a response deadline date for providing the intent to proceed. The applicant could always provide their intent to proceed on day 20, 25, etc. and at that time you have the option to use the original GFE or to issue a new one.


"if you intend to proceed, please sign and return these disclosures."

I would advise adding an additional sentence, "If we do not receive your intent to proceed on or before XX/XX/XXXX no further action will be taken."

By adding this sentence and if they don't respond you can classify the file as "closed for incompleteness".

Thank you so much for your help, Dan..........as always.

Another "denial or withdrawal" question. A customer applies for a refinance and during the application process, indicated that part of the money is new money to pay off other debt. Here, that would have to be done as a home equity loan.....a completely different type of loan in a whole lot of ways. The loan officer "withdrew" the refinance request and started over with a new application for a home equity loan. Is the refinance request a denial or a withdrawal?.....or nothing.....since we could not do the loan as requested due to state law prohibitions?

"The loan officer "withdrew" the refinance request and started over with a new application for a home equity loan."

Started over in what way? Just changed application forms...or more than that?

The applicant has made a request for credit (application). How it was being processed was changed. That's not a HMDA or Reg B denial or withdrawal, but an internal process change.

We can't expect applicants to understand banking terminology. If the wrong product was disclosed, re-disclose and document why. Only the applicant can withdraw an application. Sounds like an internal terminology issue.

So really.....since it's the same application, the first application should not be reported as withdrawn OR denied. It ended up being originated as a home equity loan?

Correct, raitchjay.....just a different application form and new earlies since different fees apply to a home equity loan.

Swiggles, that's the way i'd see it.....my inclination (David seems to agree) was always to just see this as an amended application and only one HMDA reportable application.

Thank you!!