We frequently have full applications come in where our LO will send out early disclosures and the applicant will just never respond to us. There has been internal discussions about whether to use denied (for no response), withdrawn, or approved not accepted.
Management generally agrees we cannot use Approve but not accepted for these because they haven't gone through underwriting and could still be denied.

Any input on what HMDA code to use for these? And also what our action taken date should be?

Any input would help, thank you!

*Also we cannot use Closed for Incompleteness because we do not send out the required disclosures.

Only a borrower can withdraw an application. In these cases, we deny for incomplete application.

Agree with TMatt.

Can I ask what action taken date you use? Do you deny it after 30 days of app date or do you have some kind of standard like that?

My management's only argument against using this is that their application was complete, which is why we sent out early disclosures......

There's a difference between a TRID application with the 6 pieces and having enough of an application to decision. If you still need verifications, etc. that the applicant can't/won't provide you, then you have an 'incomplete' application. I'd say something in the neighborhood of 30 days (or shorter) would be a good standard.

If you take this approach, your action date will be the date you send the denial notice.

our LO will send out early disclosures and the applicant will just never respond to us.

We include a cover letter that informs the applicant what information we need to move forward with the application. We inform them that if we don't receive the information by a certain date then we will assume they have chosen not to proceed with the loan request and report it as closed for incompleteness.

We do this as well.

And so you don't sent the applicant any notification whatsoever?

My bank sends a notice of Withdrawal....yes, I know this is not required, but management likes it. If we put such verbiage in our early disclosure letter, could we still sent the withdrawn notice but report "closed for incompleteness?

But then....off the HMDA subject.....what about non TRID loans where we don't send disclosures, therefore no letter. Must we then deny for incompleteness with an adverse action notice?

'Management likes it' is not a good reason to continue a whole lot of confusing busy work.
You've sent the applicant notification when you send the drop dead letter. We took this route on the advice of my FRB examiner years back. You tell the applicant what you need, when you need it by, and what will happen if they don't reply. One and done.

And so you don't sent the applicant any notification whatsoever?

Our cover letter is the notification and it complies with 1002.9(c).

swiggles acknowledges the notice of withdrawal is not a requirement. However, she states her management likes it. It doesn't violate anything. What's wrong with this approach?
We would all agree that "one and done" is simply and works, but if management wants the notice of withdrawal, give it. Are you going to tell management "no"?

This goes right along with several other comments I've made lately that we (compliance personnel) are part of a team. We're here to advise, not call the shots. If it doesn't violate a requirement and you've made your case, then do what management tells you to.



If you don't have what you need, you should send a NOI or you can deny. Even if you called/emailed them asking for info, if you don't have it, you must follow up with one or the other.

At its option, a creditor may inform the applicant orally of the need for additional information. If the application remains incomplete, the creditor shall send a notice in accordance with paragraph (c)(1) of this section (an adverse action notice). [§1002.9(c)(3)]

Code it as "Closed for Incompleteness" or "Denied" on your HMDA LAR, depending on which route you take (NOI or AAN).

And....there are more reasons for preparing the withdrawn notice, than meets the eye. At my bank, requiring front line to prepare the notice...just the same as they would be required to prepare an AAN, accomplishes two things.

First, it prompts them to get a file number, enter the application in our software which imports to our CRA/HDMA software and submit the file to record retention (electronic). Otherwise, I fear these applications would end up in file 13 in someone's desk drawer.

It also enables a second review of the withdrawn files to make sure the applications aren't "denials in disguise".....enough information in the file to show that we could not have made the loan, thus a denial should have been prepared.

And correct, David, I don't call the shots around here. I have also had examiners say they like the "withdrawn notice procedures" as it demonstrates that we're not sweeping applications under the rug (in file 13).

I think the difference of opinions stated here are a result of two totally different types of 'banker's. One being nothing but TRID-type and the other being full scale banks.

I think it would be great to have every loan that falls outside of TRID as neatly wrapped up and tied with a bow as swiggles approach takes. js.

I need to re-hash this topic as I am dealing with a file right now that is the same situation. We sent our customer a letter stating that "to finalize the approval of your application" we need the "signed preliminary disclosures including the intent to proceed." I am trying to confirm, but to me this doesn't sound like we have an incomplete application and we were able make a credit decision; sounds like they were approved and this should be ANA (we don't have a pre-approval program). Thoughts??

Curiously, how can you have enough to make a credit decision without ever receiving intent?

You underwrote and approved the loan before receiving an intent to proceed??

I didn't realize that was needed to make an approval, but I guess I do now . So then, we would report it as Incomplete is what y'all are saying?

You report it as it happened. If you actually approve loans before getting an intent to proceed, then you would report it ANA. But how you can gather all the necessary documentation to do the underwriting before an intent to proceed is received a little beyond me. This is a fact based determination.

Just a possibility....perhaps your lender got a verbal ITP, but requires a signed ITP. Is that what happened?

Randy, I guess I don't understand how an intent to proceed is key/preliminary to gathering information and making an approval. From personal experience when I bought my house (and from my processing days), I gave the lender all of my information upfront when I went in to apply.

Raitch-possible, but I don't think that is what happened.

I think the point is....how do you approve a loan without an appraisal and title work....and how did you get those without getting intent to proceed first?

Technically, they could get an appraisal so long as they were willing to eat the cost. But we approve loans all day long prior to ordering title work. js.

Yes, they could get an appraisal without ITP.....i just find it hard to believe banks are willing to eat the cost of the appraisal if they deny (i know that it happens, still don't understand it).

It is not key, but highly unusual. How many customer know (besides you ) exactly what the lender is going to need and show up with everything on day one? Like I said, this is a fact based issue and the issuing of the LE or receiving or not receiving an intent to proceed doesn't really matter. Approving a loan prior to receiving intent is just really out of the norm.

Additionally, requesting a consumer to sign preliminary documents and an intent to proceed sometime later down the road in order to approve the loan in my mind borderlines on a UDAAP. There are no signature requirements in the regulation and documenting this after the fact is borderline mortgage fraud. If you need these signed in order to proceed, then you should get the signatures before proceeding.