You most certainly can approve a loan without an appraisal and title work. You simply say "we'll do this if everything verifies." Some see that as an approval. I'm not saying you have to, but there is no definition of "approved" or "conditional approval". Verification is a prudent thing, not a compliance issue. If I tell someone "we can do this loan" then how are they not approved? I prudently would want to verify everything. If things don't verify like the consumer stated, then you have the right to deny the application. Just because you said "yes" doesn't mean you can't say "no" later.

....what David said........

I know I've had this discussion before but I'd like to take this a little further to see how you finish this process. We are also looking to implement where we do a cover letter requesting docs etc in order to proceed with a drop dead date...say like 20 days. So here is my thought dilemmas and would like to hear more about everybody that does it this ways process.

So lets say the Application was taken on 12/1/2017. We've given this Borrower the cover letter stating all we need by 12/21/2017 to proceed. REGB 30 day notification has been satisfied and all is good.

Now its 2/15/2018 and we've already received enough information to send to UW for a "Conditional Approval" and the file ihas been sent back to Processing Dept to wait on the additional conditions to be sent in to proceed along with waiting on Title/Appraisal etc.

Time rocks on and Borrower is now radio silent. Now before I ask this next question I want to put out there that the only time we ever code a file as Approved Not Accepted is when we have a FINAL Approval...that is per our Compliance Dept, so I can't even consider this option when I ask my question.

Mgmt wants us to go back and close out this file as Incomplete based upon that original letter in our cover letter, which in this case would be 12/21/2017 and this date would code as our Final Action date as Incomplete. My argument to them is that we absolutely can NOT do this as this will affect our 2017 HMDA LAR that's could possibly have already been filed or in the process of being scrubbed and will more than likely be missed. I said if we are that far along in the process and are still requiring more information that we've not received to move to Final Approval and the Borrower has gone silent, then we need to send out another NOI and Incomplete based upon that NEW NOI we've sent with a new drop dead date, but they state they want to get away from having to send additional NOI's. I honestly just don't see how this can be done but wanted to check with all of you who have implemented these procedures and get your thoughts.

Thanks!

Did you receive anything from the borrower after you sent the NOI or have they been radio silent all along? If all the information you're received to send this to UW was generated on your end, I think you can just go ahead and close the file for incompleteness now BUT YOU'D USE TODAY'S DATE. Action taken is when YOU take the action, not when the letter to the borrower tells them you can. We've sent out NOIs and opted to give extra time past the drop dead date and when nothing occurs, we close out the file using the current date.

Heya Truff,

I'm thinking in the scenario as we did receive some information that we were able to send to UW to get a "Conditional approval" but not everything required to go to a Final approval and somewhere along that way after receiving some initial info they went silent.

I told them there is no way we can use the "drop dead" date when Incompleting these files b/c we will be in a mess with our LAR if we did, especially during the first of the year when the drop dead date is last year and/or when we have to go to quarterly reporting.

So you guys send out an NOI in your welcome letter with disclosures as well to satisfy the initial REGB clock? Did you run in to any unseen challenges when you implemented this?

Thanks for your help!

KT, we put the drop dead date on at the suggestion of our examiners. It satisfies the reg clocks if nothing happens after we send the letter.
In the case you outline, the info you received from the borrower after sending the letter, negated that drop dead date and moved the 30 day clock out. When this happens here, we remove the items received from the list and send out another letter with a new drop dead date. We pull a report that shows how long files have been sitting and we work through them regularly to close out the ones that have passed the date.
In all honesty, the effect to your LAR of closing out the file with the drop dead date in 2017 is secondary in comparison to the procedural issues you seem to have. (of course, imo, if you've filed already, there's no way they can use the 2017 date, period. ) One hard and fast compliance rule for me is Never Backdate Anything! If you're closing out a file today, you cannot date it to have been done two months ago.

Hope that helps.

We have a similar situation now and not sure what action taken for HMDA is. Applicant applied, we sent out earlies with list of items we needed. Applicant sent back all of our requested items and we had intent to proceed as well. Underwriting was good (although we haven't ordered appraisal). Applicant all of a sudden isn't responding to phone calls or emails. What is our action taken?

Based on what's been stated (IMO it doesn't appear you ave "fully approved" the applicant - see commentary to §1003.4(a)(8)(i) #3) and assuming you don't hear anything back from them (i.e. express withdrawal), you can either deny the application or send them a notice of incompleteness.

That said, I could go approved not accepted if you were to tell me that the applicant is fully approved (all underwriting and creditworthiness conditions have been met) and the only things outstanding are customary commitment or closing conditions [Commentary to §1003.4(a)(8)(i) #13(ii)].

Thanks for the response, Jerod. We didn't have an appraisal so I'm not thinking ANA would work here. I think I'm just struggling with (a) the applicant gave us everything we asked for in our "incompleteness" letter with the earlies so sending another incompleteness letter seems odd and (b) I'm not sure what the denial reason would be if we picked denial.

I'm sure I'm making this way harder than it should be.