I have a borrower that refused to have an appraisal done. Since this loan was to be sold to FNMA, it was not an option. The underwriter canceled it as Approved not Accepted but I am thinking it should have been denied. Am I correct in this? Also, would the denial reason be Collateral?

You are correct, it would be a denial. The applicant did not meet an underwriting condition. The reason for denial would be refusal to provide/obtain acceptable appraisal of collateral.

I am 2 for 3 today!

These conditional approvals would include sufficient hazard insurance on the property as well, right? For example, if the borrower cannot, or will not, or does not, provide proof of insurance can we count that as a denial too?

Yes.

Excellent, that's what my stand has been as well. Thanks so much!