We have been talking through various scenarios today to determine how we would code them from an action taken perspective.

On TRID loans we order an appraisal as soon as we receive a signed Intent to Proceed from the applicant. If that borrower never responds and signs an intent to proceed, can we code them incomplete and send a notice of incompleteness for signed intent to proceed?

On commercial loans, sometimes an appraisal is not ordered immediately for various reasons per the customer's request (buying at auction, selling another property). If the borrower contacts us and tells us not to proceed with an appraisal, we can not come to an agreement on whether we could get by with treating that file as withdrawn at the request of the applicant. Would it be a denial for satisfactory appraisal or incomplete because the borrower has not authorized us to order an appraisal? I can talk it down all three paths but I don't feel great about any of them.

Thanks!

For TRID loans, some banks include a cover letter with the LE and give the notice of incompleteness right then and there - if the customer does not give intent and start providing the additional required documentation that you listed by the date the closing costs expire - you are done.

Commercial loans area little trickier, but you would normally not order an appraisal prior to underwriting the loan and then that would be a closing condition (collateral value) and as your credit decision was already made, incompleteness is pretty much already out the window.

If you do underwrite [and approve] the commercial deal in anticipation of them finding a property and moving forward, but that doesn't happen, it will likely be ANA. If they change their mind before decisioning, subject to appraisal, then it would be WD.

Thanks! I guess where I keep getting hung up is that a satisfactory appraisal is considered a underwriting or creditworthiness condition versus a closing condition. I was thinking down the path that we could never have an ANA without an appraisal.

Credit approval could turn into a denial with an unsatisfactory appraisal, but see Randy's comments above regarding the 'placement' of the appraisal as a closing condition. It has no bearing on creditworthiness and is unnecessary to conditinally approve a loan.

Thanks Joker. You are saying in this instance, correct? Because appraisal is listed as an underwriting condition in the commentary to 1003.4(a)(8)(I) #13(iii). Maybe I am being too literal with it. :-)

iii. Underwriting or creditworthiness conditions. Underwriting or creditworthiness conditions include, for example: conditions that constitute a counter-offer, such as a demand for a higher down-payment; satisfactory debt-to-income or loan-to-value ratios, a determination of need for private mortgage insurance, or a satisfactory appraisal requirement; or verification or confirmation, in whatever form the institution requires, that the applicant meets underwriting conditions concerning applicant creditworthiness, including documentation or verification of income or assets.

Just clarifying.

If I understand that section correctly, they are pointing to a counter-offer likely based on a received appraisal that isn't satisfactory for the amount requested. Counter-offer made for lower loan amount, for instance. In that situation, their commentary makes perfect sense.

I don't believe you can look at it the same way when you simply just don't have an appraisal yet. Now, I can see it being 'closed for incomplete', but that's entirely up to how you underwrite. Some LO's I know will just wait on the customer and be sitting on ready once they are ready to go forward with an actual deal. .

And after reading that entire section, I would say the proper resolution would be the 'closed for incomplete' if it never comes to fruition.

Thanks!! I appreciate the back and forth. This has really been a thorn in our side for some reason.

It is difficult...no doubt...so confusing at times, it wouldn't hurt my feelings for someone else to chime in and strike me down or hold me up. !