I am struggling with the HMDA action taken code Approved Not Accepted.

90% of the time our underwriters review each loan file twice. Once for the initial underwrite where a conditional approval is may be issued, and then again to follow up and make sure the 10 day to close credit report has been run and is satisfactory, verbal VOE was conducted, etc . It is normally after this review that they would issue a "clear to close". Normally the second pass underwrite is within a day or so of closing. (We are a fairly small shop so things can happen quickly)

With that info in mind - we have had a few scenarios where the A+ borrower is conditionally approved pending the credit check-up by underwriting. A few days before closing the deal falls apart because the seller wouldl not complete the required repairs. Clear to close was not issued. Would the fact that the underwriter (which we consider the credit decision) had not cleared the file completely mean that this file would not be "approved not accepted" for HMDA?

Uggg am I making this process harder than it is?

I don't think you are making this process harder than it is because the ANA code isn't as easy as it could have been. To be approved not accepted, the approval can only "subject solely to outstanding conditions that are customary commitment or closing conditions." These include things like 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.

This means that the conditional approval cannot be subject to "underwriting or creditworthiness conditions." The commentary explains these conditions as follows:

" 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."

In your case, the second round of underwriting appears to be "verification or confirmation," especially since the final credit report is pulled and reviewed for the first time. Therefore, it would appear that your initial conditional approval would not qualify for an approved not accepted.

That said, you stated that your underwriters only review each loan file twice 90% of the time. Why is that?

For example, is the process to review the loan file 100% of the time if it closes, but you stated 90% because some applications die before they get to the second underwriting? If that is the case, then I would be comfortable saying you never have approved not accepted if the file is withdrawn before the second round of underwriting because the second round of underwriting is designed to be "verification or confirmation" of an underwriting/creditworthiness condition. If your 90% statement meant something else, you may have to look at it on a case by case basis.

The items you mention for the 'second pass' review are common AFTER an underwriting decision has been made.
Your procedure sounds just like what we do here.
The underwriters aprove the loan with certain conditions.
A verbal VOE and a soft pull are done just prior to closing to make sure these two conditions haven't changed from the time of approving the loan.
But your decision was actually made back when the underwriters looked at the loan the first time. Otherwise, how would you set up a closing without an approval?