Potential borrower drops off page one of the URLA for the purpose of purchasing a home. There is a property address, but no offer to purchase, just the one page of the application. A few days later they decide that they are no longer interested in purchasing the home and withdraw. For Regulation B purposes, I would say that this is withdrawn. The applicant decided that they did not want to purchase, a credit decision was not made, and their decision was not influenced by the bank in any way. Do we have a HMDA reportable loan? My thought would be "yes" because we have a property address so this takes the application out of prequalification land. So for HMDA it would be withdrawn, for income I would say "NA", what about GMI? If the application was dropped off, would we ask the front line associate for that information? The lender never saw the applicants.

If you have a property address, it's not a prequalification. Do you have an application? That's a little gray. You say you only have page 1 of the URLA, but it also sounds like you had a request for credit. You probably don't have a completed application, but you probably have an application. You don't have to have a purchase offer to have an application.

HMDA applies to applications to purchase a dwelling that will be secured by a dwelling. Since the potential borrower didn't meet with a loan officer, how to you know that it would be secured by a dwelling? It's possible they wanted to use something else as collateral. It would still be an application for Reg B but since they withdrew, there's nothing triggered under that regulation.

If you decide it's a HMDA application, I would report income as "NA" and GMI as "NA" as well. I would write "dropped off - loan officer never saw applicants" on it and then document they contacted the bank to withdraw.

This opens a lot of questions in my head:
1) Do you allow people to drop off applications with just anyone at the bank?
2) When was it dropped off vs. when did they decide to withdraw?
3) Why didn't a loan officer contact them in between?
There's more, but I think you see my point. You don't need to answer these questions, but they should be things to consider for future procedures.

Thank you for your response!
So many questions.
Now as I unweave this story with the more information I am getting, it has become more confusing.
The application was received on 3/7 but the decision wasn't made until 4/17. They were waiting for an offer to purchase, this is a situation in which a renter wanted to purchase the place they were renting, and the landlord was dragging their feet to get a contract going. Why there was no other information obtained between that time is beyond me however it does appear that there were some emails between the lender, applicant, and potential seller. Between the application date and a couple of days ago, the applicant decided they were going to move down south to warmer weather. Now it would seem that we could determine that the purchase was going to be secured by the rental. The fact that it was over a month between app and "withdrawn" makes me wonder if it was truly withdrawn or if the lender had made a credit decision and it should be reported Approved Not Accepted. The way it was described in the email made it sound like they dropped off the one page and then shortly thereafter they decided to withdraw.

Sounds like you have lots of things to look into and lots of training opportunities!

1) I would question why nothing more was documented or provided if you received an application on 3/7 but the withdrawal didn't happen until 40 days later.

2) A purchase agreement is not necessary to have an application. It's a verification document and TRID was possibly triggered on 3/7 (if you had the 6 pieces of info) as well as other regulations. Which means a LE should have been provided plus other things.

3) I would say this sounds more like a denial than approved not accepted. It doesn't sound like the loan officer was approving it. It sounds like they may have discouraged the applicant from continuing, so the applicant simply said "forget it". I'm making a lot of assumptions, however. Something to look into.

what is cool is that we do have explicit confirmation that the applicant was no longer interested in going further with the application as they wanted to move down south for "health reasons". What is troubling is everything else

For this situation above, the applicant expressly withdrew the application due to them deciding to pick up stakes and move to a warmer climate. The lender is saying that the application was incomplete and that he hadn't made a credit decision. Would anyone agree with me that for Reg B purposes this could be seen as a withdrawn application? going further, for HMDA, would this be withdrawn also? I am hardpressed to justify withdrawn with 40 days between app and expressed withdrawal. Can it be incomplete even though there was no notice of incomplete application sent nor turndown due to incomplete application?

If you have documents in your file to support the conversations between the applicant and the lender, then I would say the Reg B clock kept getting moved out another 30 days every time they borrower couldn't get the information delivered. The borrower expressly decided to withdraw and no credit decision was made so that's what I'd use for HMDA and Reg B.

That said, I advise you to start using a letter with a drop dead date for all situations where you get an application but cannot proceed to a decision due to lack of information.

The lender is saying that the application was incomplete and that he hadn't made a credit decision. ........ I would say the Reg B clock kept getting moved out another 30 days every time they borrower couldn't get the information delivered

If the loan officer had an incomplete application they should have either sent an AAN denying the request for an incomplete application or sent the Notice of Incompleteness within 30 calendar days of receiving the application. 1002.9 does not allow a "verbal" NOI, it must be provided in writing.

IMO this is a denial for incompleteness especially since the loan officer apparently had several conversations with the applicant and the applicant failed to provide the information.

It seems weird to advise the lender to send a notice of incomplete application when the borrower has expressly withdrawn the application though. I want to tell him to just send the notice or the turndown but then the other side of my brain is like, this is just going to confuse the customer. They withdrew. But then I don't think this is a true withdrawn either, but if we consider it incomplete, we should have sent out one of the incomplete notices.

It seems weird to advise the lender to send a notice of incomplete application when the borrower has expressly withdraw

But the person did not "withdraw" until 40 days after receipt of the incomplete application. The AAN or the NOI should have been sent within 30 days of receipt of the application. IMHO they have a Reg. B notification violation because they did not comply with 1002.9.

I'm not advising to send the NOI now, I'm just stating what they should have done.

Yes, it does appear that we have a reg B situation for sure.
Just did a big ole training last month on Reg B.
Just keep swimming.