I have an applicant that would have been approved with all underwriting and creditworthiness met. The bank wants to deny the loan due to the condition of the home being purchased. The bank is requiring a home inspection, and the applicant does not want to do an inspection, so the applicant withdrew the loan. Would this non-originated loan need to be reported as a denial or approved not accepted?

If we send an AAN, then I'm coding it as a denial. In the W/D or ANA space, I'll try to make the distinction between underwriting v. customary closing condition, but if I'm sending an AAN, it's a denial, and I can't fathom anyone questioning it.

4. Action taken - application denied. A financial institution reports that the application was denied if it made a credit decision denying the application before an applicant withdraws the application or the file is closed for incompleteness. See comments 4(a)-2 through -4 for guidance on transactions in which more than one institution is involved.

Would this non-originated loan need to be reported as a denial or approved not accepted?

IMO it is a denial due to the condition of the collateral.


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.

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.