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#2232636 - 03/09/20 03:09 PM Conditional Approval
Questions Offline
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Joined: Jun 2009
Posts: 85
We have a mortgage loan on which we have given verbal conditional approval. The applicant's creditworthiness was not an issue, rather there were issues with loan closing conditions (issues with title). We have advised the applicant of those issues and he states that he is working toward resolving the issue. This loan has been in our pipeline for longer than I am comfortable. At a certain point, I believe we should consider this application as Approved Not Accepted for HMDA purposes, and deny the loan due to collateral issues for ECOA purposes. Is this correct? How long would you give the applicant to resolve these issues before taking action on the loan?

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Lending Compliance
#2232983 - 03/14/20 03:41 PM Re: Conditional Approval Questions
Truffle Royale Offline

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Joined: Jul 2003
Posts: 17,285
We start with a drop dead date of 30 days out. Then we touch base with the applicant at weekly intervals. If noting is recieved, we close the file at that 30 day mark.
In your case, your credit docs are likely expiring or already expired and maybe the appraisal has too. So I would definitely close it out and tell the borrower to come back when he's got the title issue cleared up.

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#2233037 - 03/16/20 06:22 PM Re: Conditional Approval Questions
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,644
The Swamp
We've kept the open for AGES...some end up well, some end up never closing.
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My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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#2234444 - 04/08/20 06:59 PM Re: Conditional Approval Questions
M&M Offline
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Joined: Nov 2003
Posts: 527
Midwest
We are trying to deal with this issue. Does anyone have a sample conditional commitment letter they could share that could be used to communicate the tentative approval, pending receipt of a clear title, etc.?

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#2251225 - 03/25/21 02:26 PM Re: Conditional Approval Questions
Compliance504 Offline
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Joined: Dec 2008
Posts: 668
Tennessee
So this situation does need an Adverse Action Notice for ECOA....even though it is not denied for underwriting reasons....and we report approved not accepted for HMDA....

I need to find out if we are supposed to be issuing AANs when we cannot close due to title issues....

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#2251238 - 03/25/21 04:26 PM Re: Conditional Approval Questions
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,255
Galveston, TX
supposed to be issuing AANs when we cannot close due to title issues....

Yes - of course you do. An AAN is required under Regulation B whenever you deny a credit application.
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#2251445 - 03/30/21 01:45 PM Re: Conditional Approval Questions
Compliance504 Offline
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Joined: Dec 2008
Posts: 668
Tennessee
Thanks, Randy.....we were taught that title is not a reason to approve or decline a loan....it only affects closing the loan....

I will retrain everyone on this....

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