We have a withdrawn application in which the applicant initially applied for a loan for 10 years at 4.50% fixed to purchase a primary residence. The Loan Estimate was given to the borrower for this product. After a “draft” cash flow was prepared, it was determined that the borrowers DTI would be too high. An Adverse Action with Counteroffer was given verbally and mailed offering a 30 year 7/1 ARM loan. The borrower accepted the counteroffer. No new Loan Estimate was given due to the fact that no tolerances would need to be re-set. Days later, before a final credit decision could be made, the applicant withdrew the application.

Do we report the loan term and and introductory rate based on the agreed upon counteroffer, since the accepting of a counteroffer is like a "reset" to the loan request? We feel this is reported as a withdrawn application.

Thanks in advance.

A counteroffer involves - we cannot do this but we will make you this loan. How can they accept a counteroffer that was not actually made? This is a denial from my point of view.

Well, they agreed to move forward with the transaction under the new loan terms, we ordered an appraisal, etc., but during that time before a credit decision could be made (because we had not received the appraisal back), the applicant's withdrew the loan saying that they and the seller decided to proceed with the purchase at a future date.


I was kind of basing my opinion on Comment 4(a)(8)(i)-9 - FI made a counteroffer to lend on terms different than applicant's initial request, applicant agreed to proceed with the terms of the counteroffer, then FI conditionally approves application subject to underwriting or creditworthiness conditions, and the applicant expressly withdraws before satisfying all underwriting and creditworthiness conditions and before the FI denies the Application or closes the file for incompleteness, then report application withdrawn.

I know that is not our exact scenario, but it is similar. They agreed to the counteroffer and there were some additional conditions that needed to be met before we make a final decision. But the customer had to withdraw since they decided to purchase the property later on.

For HMDA, you can report based on a counter-offer without making a loan as long as it is expressly accepted. If you are reporting it as withdrawn, I would report the terms at the time the borrower withdrew. Personally, I would only report as withdrawn here if you had something in writing from the borrower that was crystal clear he was expressly accepting the c/o. W/D days after getting a c/o sounds a lot like he didn't actually want the new terms. Examiners are more likely to question a w/d than a denial on close calls, and you already covered yourself for ECOA.

1003.4(a)(8)(i) - 9. Action taken - counteroffers. If a financial institution makes a counteroffer to lend on terms different from the applicant's initial request (for example, for a shorter loan maturity, with a different interest rate, or in a different amount) and the applicant declines to proceed with the counteroffer or fails to respond, the institution reports the action taken as a denial on the original terms requested by the applicant. If the applicant agrees to proceed with consideration of the financial institution's counteroffer, the financial institution reports the action taken as the disposition of the application based on the terms of the counteroffer. For example, assume a financial institution makes a counteroffer, the applicant agrees to proceed with the terms of the counteroffer, and the financial institution then makes a credit decision approving the application conditional on satisfying underwriting or creditworthiness conditions, and the applicant expressly withdraws before satisfying all underwriting or creditworthiness conditions and before the institution denies the application or closes the file for incompleteness. The financial institution reports the action taken as application withdrawn...

Edit: Started posting before your second post. Sounds like he expressly withdrew for a different reason, so ignore my caution .

No, he wanted to terms from what I understand. For whatever reason the seller needed to hold off on selling the home at this time and so the buyer agreed to the postponing the purchase.

Thanks for the input!!!

Yeah, I would consider this a withdrawal and use the information associated with the application at the point in time when the withdrawal occurred. This is assuming you have appraisal as an underwriting/creditworthy condition, which it sounds like you do.