I have a HMDA reportable application. We provided a decline due to the value of the collateral, offered a loan for a lower amount. Customer accepted the offer. We moved forward. 10 days later the customer withdrew that acceptance and the loan did not close. I believe this should be reported as the original denial. Correct?

Thanks

Correct; a denial.

FWIW, I agree with denial as well.

Correct - from HMDA-GIR

b. For a counteroffer (your offer to the applicant to make the loan on different terms or in a different amount from the terms or amount applied for), use Code 1 if the applicant accepts. Use Code 3 if the applicant turns down the counteroffer or does not respond.

I agree with this, but my collegues do not. They would say this app is approved but not accepted based on the fact that he accepted the new terms. I am having a hard time accepting this thinking. Is the only argument then to say the only time a counteroffer is truely accepted is if the application is then originated? Please help me understand how to present this to the group.

From the Reg. Commentary

Paragraph 4(a)(8).
1. Action taken--counteroffers. 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.

They may have initally accepted you counteroffer, but the loan did not originate, therefore, it is a denial and you report the terms that they initially requested, including the amount they initially requested.

The word "accepted" as undefined by HMDA means "originated". It does not mean an e-mail from the customer saying "I accept"

They would say this app is approved but not accepted based on the fact that he accepted the new terms.

But they didn't accept the new terms did they? For whatever reason they decided to walk away from the counteroffered terms. If they walked away then how did they accept the terms?

Can I ask a question about what date to report -- we sent a counter offer notice with AAN language on 10/15/2015. Borrower accepts terms, then before the loan closes, borrower's financials change (he buys another rental property) and we then deny on 11/10/2015 due to higher debt ratio. I believe I should report this application as denied on 10/15/2015 rather than the updated denial date of 11/10/2015, is that correct? And report the original amount requested, correct?

I would report the 11/10/2015 date which is actually your final action date.

In this case the borrower accepted the counteroffer and in your process of verifying no material changes to the applicant's financial condition you discovered an adverse change which affected your willingness to continue and denied (withdrew) the counteroffer due to this adverse change. Basically the applicant didn't have a chance to consummate the counteroffer because you withdrew it.

I would not argue to stringently against the 10/15/15 date either but in this case I think the circumstance warrants the 11/10/15 date as your date of action.

Dan, would you then report the lower loan amount of the counteroffer or the loan amount originally requested?

Amount originally requested.

Always report the original request if the loan does not close.

Agreed original loan amount. But I'm struggling with reporting the second/later denial date, but I appreciate Dan that you said this could possibly go either way. My process in the past has been to report the original action taken date.

Dan, would you then report the lower loan amount of the counteroffer or the loan amount originally requested?

In this scenario I would report the counter-offered amount instead of the original.

I'm basing this on a one off special circumstance situation. The borrower accepted the counteroffer but you withdrew it. IMO that's opposite of the borrower withdrawing their acceptance.

Like I said this could go either way but IMO reporting the counter-offered amount and the 11/10/15 date more accurately reflects what happened in this situation.

As a rule non originated loans or unaccepted counteroffers are reported based on the original amount requested but in this case I feel there is an exception to the rule.

Thanks Dan! Gotta love these one offs... why do I always find them the night before due? :-)