Denials

If customer changes mind on application on 36th day after application. Is a denial/withdrawn applicable since passed the 30 days past day of application. Customer was approved but changed mind after received appraisal.

If the customer was approved, would it not be approved but not accepted? Why did they decide not to go through with the transaction after the appraisal came in?

They just changed their mind. Decided it was not what they wanted to do at this time. My main concern is do you type an adverse action since it is 36 days later? I have a letter from the customer.

There is no denial, if you approved the loan and told them. They cannot withdraw after a credit decision is made. If a credit decision was not made and communicated, then the application is withdrawn, and you would just save.the customer communication to that fact.

I agree with Randy that if the customer truly changed their mind - on their own - it would not be a denial. That said, if there was something that influenced the customer to back out (say, a low appraised value that was going to kill the deal), then it could be a denial based on the circumstances.

For example, let's say a customer applied to refi their house to pay off $50,000 and also get $30,000 back for a total of $80,000. The appraisal needed to come in at $100,000 (80% LTV) for the rate/terms/payment they wanted/applied for, but it came in at $85,000. I counter offer at $68,000 (still 80% LTV) so the $50,000 could still be refinanced, but the customer would only get $16,000 back instead of the original $30,000. After hearing this, the customer does not accept the counter offer and "changes their mind." This scenario would be a denial due to the fact that I wasn't going to grant the loan on substantially the same terms (i.e. loan amount) they applied for. Had they accepted the counter offer and I closed the loan, I would not need to send an Adverse Action Notice, but since they didn't accept it, an AA Notice would be needed as the loan was denied due to the low appraised value - which changed the terms I could offer to the applicant.

The bottom line is that if you are unable to do the loan on substantially the same terms as applied for, this would be a denial and you would owe the customer an Adverse Action Notice (assuming they didn't accept a counter offer). If they really did just change their mind (and the terms - like a low appraised value - didn't influence this decision), you don't need to send them an AA Notice as you did not deny the transaction.

From Regulation B:
1002.2(c) Adverse action. (1) The term means: (i) A refusal to grant credit in substantially the amount or on substantially the terms requested in an application unless the creditor makes a counteroffer (to grant credit in a different amount or on other terms) and the applicant uses or expressly accepts the credit offered

Thank you. My next question is you can do a denial to a customer if past 30 days from application?

If you mean you actually denied them and did not send a notice? The answer to that is I would highly suggest it. At your next examination, your examiners would require it and also for you to complete file scrub on all application received for the last 25 months or longer, if you have not destroyed the applications according to the retention requirements in Regulation B.

theloanbug, I think further clarification on your question would help us to answer it better. Regardless, as Randy stated, if you deny a loan, you need to send an Adverse Action Notice.

Customer was never denied. Did not realize you could send a denial 36 days after application? I thought you had a time frame to send denials.

You have 30 days to make your decision after you have a "completed" application. To obtain a "completed" application, that might take some time.

1002.9(a) Notification of action taken, ECOA notice, and statement of specific reasons. (1) When notification is required. A creditor shall notify an applicant of action taken within:

(i) 30 days after receiving a completed application concerning the creditor's approval of, counteroffer to, or adverse action on the application;

Reg B requires you to action a loan within 30 days after receiving a completed application.
The 30 days can roll meaning if you got an application on 1/1 but didn't get all the supporting documentation (W2, appraisal, etc.) till 1/20, the thirty days started on 1/20.
And even if you took more than 30 days to decide to deny the loan, you still need to send an AAN. The 30 days is not a hard stop on your obligations to the borrower.