Back to another Denial question I'd like an opinion from you guys. We had a loan that had a Final Approval on the file but right as it got to closing apparently an ex husband would not sign a quit claim deed so we were unable to close the loan for the borrower. Because they never could get it resolved she finally said she didn't want to do the loan.

I felt it should have been denied but we coded as ANA. When I questioned about the Denial this was the response as to why we couldn't deny: ​For this loan, we can't deny this loan based on a seller issue, in this case, one of sellers ex-husband refuses to sign the Quit Claim deed.

In my opinion we have "refused to grant credit" so this should have been Denied regardless if it was a seller or borrower issue, we can't approve a loan without clear title...right?

Am I thinking correctly?
Thanks,
Karen

I would deny this for collateral reasons since you don't have clear title.

Yep, insufficient collateral to me too.

Agreed. I would use other "Unable to obtain clear title" on the AAN.

Yep, insufficient collateral to me too.

I disagree- the collateral is not "insufficient". JustKeepSwimming is correct. Unable to obtain clear title to the collateral.

thanks everybody for your input...exactly what I thought except I would have said insufficient collateral so I'm glad you guys mentioned that as well.

I'm back with another Denial question concerning Collateral please...sorry to ask again but I can't for the life of me find anywhere in my search treads...I know I've seen this asked before!

When you are doing a Construction Loan and the Appraisal comes back of course "subject to" Final Inspection, but before we have the Final Inspection completed the Borrower decides to Withdraw and go with another bank. Would you Deny this loan for Inadequate Collateral?

Thanks

And maybe I should also clarify...the house was already sitting on the land as it was almost completed so all was required was a Final Inspection to ensure the home was complete and the value had not changed. This was the final step to finish so the loan could obtain final approval to close

"subject to final inspection" happens after the house is completed - how can they withdraw - haven't you made the loan by then.

No it was a home that was almost completely built when they started the loan...it didn't start from the ground up on this loan like most Construction/Perm loans do.

Approved but not accepted.

So a similar question for you guys but this time it is on a loan to purchase:

An appraisal has been completed and marked "as is", however our Appraisal Dept has conditioned the file for a Final Inspection to repair roof and inspect hot water heater before we can proceed to close the loan.

The borrower has come back and stated they want to withdraw their file to go with another bank for a better rate. I sent for a Denial based upon the Collateral was not sufficient to lend at the time they withdrew. The UW states to Withdraw their file because they went to a bank for a better rate and not because they didn't state they would not have the repairs completed.

I'm so confused...

https://www.ffiec.gov/hmda/faqreg.htm#action

You conditioned the approval upon repairs being completed to the property. The applicant did not meet your conditions and went elsewhere. You have a denied application for value or condition of collateral.

Thanks Dan as always for your help.

So just to get your opinion on the scenario I had given above on 9/8 where this was a "Construction Loan" and the appraisal we had showed the house almost completely finished but was marked "subject to final inspection", wouldn't that be the same scenario and a Denial is warranted if they withdraw the loan before a Final Inspection has been completed? IMO I do not see any difference. I mean I could understand if the appraisal just had raw land and specs but one that shows an almost completed house that didn't start from the ground up when the application was submitted to us? maybe I'm just missing a link in my comprehension of these?

If you conditioned an approval based on underwriting conditions such as an appraisal and the applicant does not meet those conditions then you have a denied application regardless of the reasons the applicant did not meet the conditions.

In both cases you presented the approval was based on underwriting conditions (repairs in order to have acceptable collateral) and the applicants chose to go somewhere else instead of meeting your underwriting conditions. IMO those are denials, not withdrawals or approved but not accepted.