We have a loan that the Borrower did not qualify for the product they requested. Our Policy is to issue a written Counter Offer for a product, when applicable, we feel they could possibly qualify for, however this loan I am reviewing it appears they only issued a Verbal Counteroffer. Two days later the Borrower verbally withdraws their file, so in my opinion they did not accept the Counteroffer and we must issue a Denial based upon original terms requested.

The UW states they would have been "conditionally approved" for the new product (no conditional approval in file) and disclosures were issued and received by the Borrower but in my opinion this doesn't mean anything...am I missing something here? In the UW's opinion we have a clear case to Withdraw the file, but I am giving them push back for a Denial. Instead the UW decided to issue a Notice of Incomplete for Income docs and wants me to Incomplete the file once it expires. In my opinion this is also wrong because we have clear documentation that this Borrower has "withdrawn" their file and gone with another Lender.

What are your thoughts...I believe we have a clear Denial based upon the Original Terms they applied for and did not qualify.

Thanks!

What they would have been is irrelevant. They did not accept the verbal counteroffer. The loan request was denied.

The loan officer IMO has crossed into SAR territory for wanting to falsify documents in a federally related mortgage loan file. If this was me I would be expanding my scope of review for this loan officer's applications, especially non originated ones.

Agreed. There is documentation that a verbal counter-offer was made and not accepted. This is a denial.

Thanks so much you guys! I just needed to be certain I was correct with my arguement before I pushed back any more!

KTM, although the underwriter approved a counteroffer, it was
" (i) A refusal to grant credit in substantially the amount or on substantially the terms requested in an application . . ."

If that were not the reg, it would be easy to approve/counteroffer all loans. Example, apply for $100K, approved for $1K. No big deal, approved it with slightly different terms.
Agree with Dan to see if there were any others, at least before the examiners do.