I am working on an ECOA audit and have decided to review applications that have not yet closed but for which we received the application more than 30 days ago. I know that the 30 day timing is from when we have a "complete" application, so for example, we would have to have all the financial information to make an analysis for ATR (consumer RE). Once we receive the last of the financial information our 30 day timing begins. What I am seeing is that when all the financial information is received a credit analysis is ordered from that department and an appraisal is ordered. Typically we receive the credit analysis back sooner than the appraisal. Based on the analysis (and credit history/report) the LO may be able to approve the credit request, but it is still contingent on the appraisal coming back and it being within the LTV limits.
For ECOA purposes, if the LO expresses the approval contingent on the appraisal, it seems we are meeting the 30 day deadline to express action taken. However, once the appraisal is received it could potentially cause the LO to have to decline the application or to counteroffer for a different loan amount or terms.
Therefore, is that expressed approval with contingencies really a "true" or "final" approval for ECOA purposes? Some within our organization feel that an approval is not an approval until everything is received and considered, include the appraisal. That the approval with contingencies is more of a heads up of where things currently stand but is not a final decision; a "soft" approval of sorts.
I'm not sure what to do with that. For example, lets say the approval with contingencies meets ECOA timing requirements, but then after the appraisal is received the loan is declined based on the appraisal, would it be reported for HMDA as a decline? It doesn't seem approved not accepted would be appropriate since no counteroffer was given.
Always learning something new...