We just reviewed a file where the lender states the loan was ready to close in Nov 2020 however the day of closing the title co indicated the seller had a lien placed on the property that morning so the loan didn’t close. The lender’s time line comment sheet indicates she verbally inquired about status of the outstanding title issue each month however it was still outstanding as of the end of March 2021. The lender is now stating the borrower wants to withdraw the loan request.

We’ve got a Reg B and HMDA issue-
There’s no written notification in the file stating we needed clear title by _____ date
We didn’t send a denial.
It appears we have a verbal counteroffer (title gets resolved, we close) that’s drawn out then the borrower says ‘no thanks’. That’s a denial.
If this is accurate, what’s our action date for Reg B and HDMA - 2020 or 2021?

The date the borrower no longer wants to proceed and for HMDA this is an approved but not accepted as clear title is a customary closing condition.

If all underwriting and creditworthiness conditions have been met, and the outstanding conditions are solely customary commitment or closing conditions and the applicant expressly withdraws before the covered loan is originated, the institution reports the action taken as application approved but not accepted.

ii. Customary commitment or closing conditions. Customary commitment or closing conditions include, for example: a clear-title requirement, an acceptable property survey, acceptable title insurance binder, clear termite inspection, a subordination agreement from another lienholder, and, where the applicant plans to use the proceeds from the sale of one home to purchase another, a settlement statement showing adequate proceeds from the sale.

Ahh, ok. The borrower was approved, collateral had the issue. Thank you for that reminder.

Do you think we have an issue since it was left open without a written counteroffer?

There was nothing to counter-offer - was there? What would the counter-offer consist of? Why a bank would leave a loan approval open for that long is a good question though. That needs to be tightened up.