We approved a loan prior to getting the appraisal. The borrower notified us they did not accept our approval and declined the loan. A day later, after the with notification to not accept our approval, we received the appraisal. From what I read we have to report the property value that we based our credit decision on. Meaning that we would not report the appraised value. Am I thinking right? Thanks.

The LO may have estimated a value and if so, then you could use that. I'm not quite sure how you could actually fully approve a loan without proof of sufficient value, but that's on y'all I suppose.

It's really important, however, to know exactly what you have because you will report a value 'used', if used, on an ANA, but you won't report a value on a bona fide withdrawal.

I don't see how this can be an ANA....it seems to me like it has to be a withdrawal. You can't give final approval without an appraisal/evaluation.

I can't see ever reporting any value but an appraisal or evaluation on the LAR....you cannot USE any other value to make a credit decision. You can't deny/approve a loan based on what the applicant says a property is worth, or a LO's wild guess.

This is why I said:

I'm not quite sure how you could actually fully approve a loan without proof of sufficient value, but that's on y'all I suppose.

If they approved it regardless, I'd like to see them lawfully renege on a technicality. Kinda like denying a loan and the borrower proves the reason invalid. You just made a loan like it or not

I wasn't disputing what you said.....I'm just saying that from a wholistic approach i suppose, i don't see how (again, unless your bank is in the short-lived business of approving loans without appraisals/evaluations to support) anything but an appraisal/evaluation SHOULD ever make it onto a LAR. Withdrawn files get reported as NA. Consummated loans should report the appraisal/evaluation value. Denied loans for value should report the same. Denied loans for credit-based reasons where no appraisal/evaluation is ever ordered should report NA for property value IMO (i do not believe it is correct to report the applicant's estimate of value of the property, or the LO's).

I get what you are all saying thinking it is a withdrawal. However, it was a conditional approval, then the borrower did not accept the loan. According to 1003.4(a)(8)(i), "If the conditions are solely customary commitment or closing conditions and the conditions are not met, the institution reports the action taken as approved but not accepted. If all the conditions (underwriting, creditworthiness, or customary commitment or closing conditions) are satisfied and the institution agrees to extend credit but the covered loan is not originated, the institution reports the action taken as application approved but not accepted"

Also Paragraph 4(a)(28).

1.General.

A financial institution reports the property value relied on in making the credit decision. For example, if the institution relies on an appraisal or other valuation for the property in calculating the loan-to-value ratio, it reports that value; if the institution relies on the purchase price of the property in calculating the loan-to-value ratio, it reports that value.

Someone mentioned that we should always use the appraised value. On purchase loans, we always the lesser of the appraised value or the purchase price on a purchase loan.

Saying that, the appraisal is lower than the purchase price, we received the information after the conditional approval so I am going with the purchase price rather than the appraisal.

If you're issuing a conditional approval, I would report the stated value that you relied on in making that approval.

Sounds like a conditional approval based on UNDERWRITING conditions. They withdrew the application before it was received.

Financial Institution provided conditional approval specifying underwriting or creditworthiness conditions, and the Application was expressly withdrawn by the applicant before the applicant satisfied all specified underwriting or creditworthiness conditions and before the Financial Institution denied the loan or closed the file for incompleteness. Comments 4(a)(8)(i)-5 and 4(a)(8)(ii)-3.

This makes your value moot.