Scenario:The bank approves an application for a car loan pending acceptable collateral. The applicant decides they do not want the loan because they received a better rate at another institution. What action would we take on these types of loans?

You took no adverse action, therefore there is no notice requirements under 202.9.

Bank is working on a more automated way of documenting withdrawn applications and wants to use the two following reasons. The second one I believe I am ok with as a withdrawn reason however I'm questionning #1. If the bank does not offer a certain type of loan request there is no adverse action, but if the bank does not offer the terms requested wouldn't that be adverse action and a notice required to be sent?

#1-Customer has found more favorable terms with another bank.
#2-Customer has found more favorable rate with another bank.

Appreciate any thoughts.

First, I recommend that all application be closed using the HMDA Action Codes (even if not HMDA) using the KISS theory. Then this application would not be "withdrawn" because a credit decision was made.

If the applicant justs requests a loan and it is approved at your "standard" rate and the applicant goes away for a better rate, it would be Approved, Not Accepted.

If the applicant requests 4% APR and you are unwilling to give that rate, it would be a denial.

Very few, if any, files would be closed as "withdrawn".

Al

Thank you Al. I appreciate your response, it was helpful.