Hi,

I am hoping someone could provide some feedback. The new HMDA rule has the requirement to report the property value relied on. For loans that are closed for incompleteness or withdrawn where no credit decision was made to report NA. Historically I believe bankers have not looked at a conditional approval as a credit decision. If a loan has a conditional credit approval but is then withdrawn would you report the property value as NA? Or since you had a conditional approval do you believe you should report the value relied on? Any feedback would be appreciated.

Someone else may be able to give a more thorough response, but conditional approvals are certainly considered a credit decision. The only nuance to conditional approvals is whether they are treated as approved but not accepted when customary closing conditions are given and not met, versus a denial when underwriting or creditworthiness conditions are given and not met. (Comment for 1003.4(a)(8)(i)-13 Action Taken—Conditional Approvals)

To your original question: if you relied on property value (using whatever means--not necessarily an appraisal), report it. In the official commentary, Paragraph 4(a)(28) is very pertinent to your question.

And if it were a TRID loan, I would think that you would use the value relied on in getting out your LE, since estimated property value is one of the 6 pieces of a TRID application (assuming no other valuation had been received at the time if was withdrawn).

Thoughts on that?

dlucas - Thank you for the response but I am a little confused by your response. You indicated that a conditional credit approval is certainly a credit decision and then go on to say that it would either end up as a "approved but not accepted" or "denial."

I just want to make sure whether it could also still be withdrawn by the customer. According to the small entity compliance guide released by the CFPB page 106 shows two potential outcomes for "Application Withdrawn." The second scenario for "Application Withdrawn" states:

"Financial Institution provide conditional approval specifying underwriting or creditworthiness conditions, and the Application was expressly withdrawn by the applicant before the applicant satisfied all specified underwriting or creditworthiness conditions and before the financial institution denied the loan or closed the file for incompleteness."

This to me supports that a loan can receive a conditional credit approval and then be withdrawn. Maybe you were just providing commentary if the conditions were customary closing conditions only in which case I would see your point on approved but not accepted or denied. I just want to make sure I was not misinterpreting you response. Thanks,

Yes, under the new rules an application can be conditionally approved and then be withdrawn. That is clearly stated in the commentary. It depends upon the type of condition.

For property value and combined LTV, if the financial institution relied upon a property value and hence an LTV in reaching the decision that it did make, I would report the value and LTV.

Thanks Kathleen!

I appreciate the clarification on confirming that you can report a loan as withdrawn depending upon the type of conditions in a conditional credit approval.

I am still struggling with reporting the property value and LTV on a loan that is withdrawn based on do you consider a conditional credit approval a "credit decision." I went back through the HMDA rule and commentary and did not finding any information where the bureau indicated you should report the property value and LTV when you have a conditional credit approval rather it just states that you should report NA if the action taken is withdrawn and no "credit decision" was made. I also could not locate anything from the bureau which would indicate their definition of a credit decision.