No Response from Applicant - Deny or WD?

Posted By: AW27

No Response from Applicant - Deny or WD? - 10/03/17 02:59 PM

We frequently have full applications come in where our LO will send out early disclosures and the applicant will just never respond to us. There has been internal discussions about whether to use denied (for no response), withdrawn, or approved not accepted.
Management generally agrees we cannot use Approve but not accepted for these because they haven't gone through underwriting and could still be denied.

Any input on what HMDA code to use for these? And also what our action taken date should be?

Any input would help, thank you!

*Also we cannot use Closed for Incompleteness because we do not send out the required disclosures.
Posted By: TMatt87

Re: No Response from Applicant - Deny or WD? - 10/03/17 03:10 PM

Only a borrower can withdraw an application. In these cases, we deny for incomplete application.
Posted By: raitchjay

Re: No Response from Applicant - Deny or WD? - 10/03/17 03:12 PM

Agree with TMatt.
Posted By: AW27

Re: No Response from Applicant - Deny or WD? - 10/03/17 03:14 PM

Can I ask what action taken date you use? Do you deny it after 30 days of app date or do you have some kind of standard like that?

My management's only argument against using this is that their application was complete, which is why we sent out early disclosures......
Posted By: raitchjay

Re: No Response from Applicant - Deny or WD? - 10/03/17 03:18 PM

There's a difference between a TRID application with the 6 pieces and having enough of an application to decision. If you still need verifications, etc. that the applicant can't/won't provide you, then you have an 'incomplete' application. I'd say something in the neighborhood of 30 days (or shorter) would be a good standard.
Posted By: hmdagal

Re: No Response from Applicant - Deny or WD? - 10/03/17 03:35 PM

If you take this approach, your action date will be the date you send the denial notice.
Posted By: Dan Persfull

Re: No Response from Applicant - Deny or WD? - 10/03/17 07:30 PM

our LO will send out early disclosures and the applicant will just never respond to us.

We include a cover letter that informs the applicant what information we need to move forward with the application. We inform them that if we don't receive the information by a certain date then we will assume they have chosen not to proceed with the loan request and report it as closed for incompleteness.
Posted By: burke116

Re: No Response from Applicant - Deny or WD? - 10/03/17 07:38 PM

We do this as well.
Posted By: swiggles

Re: No Response from Applicant - Deny or WD? - 10/04/17 01:27 PM

Quote:
We include a cover letter that informs the applicant what information we need to move forward with the application. We inform them that if we don't receive the information by a certain date then we will assume they have chosen not to proceed with the loan request and report it as closed for incompleteness.


And so you don't sent the applicant any notification whatsoever?

My bank sends a notice of Withdrawal....yes, I know this is not required, but management likes it. If we put such verbiage in our early disclosure letter, could we still sent the withdrawn notice but report "closed for incompleteness?

But then....off the HMDA subject.....what about non TRID loans where we don't send disclosures, therefore no letter. Must we then deny for incompleteness with an adverse action notice?
Posted By: Truffle Royale

Re: No Response from Applicant - Deny or WD? - 10/04/17 02:24 PM

'Management likes it' is not a good reason to continue a whole lot of confusing busy work.
You've sent the applicant notification when you send the drop dead letter. We took this route on the advice of my FRB examiner years back. You tell the applicant what you need, when you need it by, and what will happen if they don't reply. One and done.
Posted By: Dan Persfull

Re: No Response from Applicant - Deny or WD? - 10/04/17 02:52 PM

And so you don't sent the applicant any notification whatsoever?

Our cover letter is the notification and it complies with 1002.9(c).
Posted By: David Dickinson

Re: No Response from Applicant - Deny or WD? - 10/04/17 02:55 PM

Quote:
'Management likes it' is not a good reason to continue a whole lot of confusing busy work.

swiggles acknowledges the notice of withdrawal is not a requirement. However, she states her management likes it. It doesn't violate anything. What's wrong with this approach?
We would all agree that "one and done" is simply and works, but if management wants the notice of withdrawal, give it. Are you going to tell management "no"?

This goes right along with several other comments I've made lately that we (compliance personnel) are part of a team. We're here to advise, not call the shots. If it doesn't violate a requirement and you've made your case, then do what management tells you to.


Quote:
But then....off the HMDA subject.....what about non TRID loans where we don't send disclosures, therefore no letter. Must we then deny for incompleteness with an adverse action notice?

If you don't have what you need, you should send a NOI or you can deny. Even if you called/emailed them asking for info, if you don't have it, you must follow up with one or the other.

At its option, a creditor may inform the applicant orally of the need for additional information. If the application remains incomplete, the creditor shall send a notice in accordance with paragraph (c)(1) of this section (an adverse action notice). [§1002.9(c)(3)]

Code it as "Closed for Incompleteness" or "Denied" on your HMDA LAR, depending on which route you take (NOI or AAN).
Posted By: swiggles

Re: No Response from Applicant - Deny or WD? - 10/04/17 03:47 PM

And....there are more reasons for preparing the withdrawn notice, than meets the eye. At my bank, requiring front line to prepare the notice...just the same as they would be required to prepare an AAN, accomplishes two things.

First, it prompts them to get a file number, enter the application in our software which imports to our CRA/HDMA software and submit the file to record retention (electronic). Otherwise, I fear these applications would end up in file 13 in someone's desk drawer.

It also enables a second review of the withdrawn files to make sure the applications aren't "denials in disguise".....enough information in the file to show that we could not have made the loan, thus a denial should have been prepared.

And correct, David, I don't call the shots around here. I have also had examiners say they like the "withdrawn notice procedures" as it demonstrates that we're not sweeping applications under the rug (in file 13).
Posted By: RR Joker

Re: No Response from Applicant - Deny or WD? - 10/06/17 05:10 PM

I think the difference of opinions stated here are a result of two totally different types of 'banker's. One being nothing but TRID-type and the other being full scale banks.

I think it would be great to have every loan that falls outside of TRID as neatly wrapped up and tied with a bow as swiggles approach takes. js.
Posted By: George

Re: No Response from Applicant - Deny or WD? - 11/29/17 03:47 PM

I need to re-hash this topic as I am dealing with a file right now that is the same situation. We sent our customer a letter stating that "to finalize the approval of your application" we need the "signed preliminary disclosures including the intent to proceed." I am trying to confirm, but to me this doesn't sound like we have an incomplete application and we were able make a credit decision; sounds like they were approved and this should be ANA (we don't have a pre-approval program). Thoughts??
Posted By: RR Joker

Re: No Response from Applicant - Deny or WD? - 11/29/17 03:51 PM

Curiously, how can you have enough to make a credit decision without ever receiving intent?
Posted By: rlcarey

Re: No Response from Applicant - Deny or WD? - 11/29/17 03:56 PM

You underwrote and approved the loan before receiving an intent to proceed??
Posted By: George

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:14 PM

I didn't realize that was needed to make an approval, but I guess I do now smile. So then, we would report it as Incomplete is what y'all are saying?
Posted By: rlcarey

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:18 PM

You report it as it happened. If you actually approve loans before getting an intent to proceed, then you would report it ANA. But how you can gather all the necessary documentation to do the underwriting before an intent to proceed is received a little beyond me. This is a fact based determination.
Posted By: raitchjay

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:30 PM

Just a possibility....perhaps your lender got a verbal ITP, but requires a signed ITP. Is that what happened?
Posted By: George

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:45 PM

Randy, I guess I don't understand how an intent to proceed is key/preliminary to gathering information and making an approval. From personal experience when I bought my house (and from my processing days), I gave the lender all of my information upfront when I went in to apply.

Raitch-possible, but I don't think that is what happened.
Posted By: raitchjay

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:50 PM

I think the point is....how do you approve a loan without an appraisal and title work....and how did you get those without getting intent to proceed first?
Posted By: RR Joker

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:52 PM

Technically, they could get an appraisal so long as they were willing to eat the cost. But we approve loans all day long prior to ordering title work. js.
Posted By: raitchjay

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:53 PM

Yes, they could get an appraisal without ITP.....i just find it hard to believe banks are willing to eat the cost of the appraisal if they deny (i know that it happens, still don't understand it).
Posted By: rlcarey

Re: No Response from Applicant - Deny or WD? - 11/29/17 04:54 PM

It is not key, but highly unusual. How many customer know (besides you smile ) exactly what the lender is going to need and show up with everything on day one? Like I said, this is a fact based issue and the issuing of the LE or receiving or not receiving an intent to proceed doesn't really matter. Approving a loan prior to receiving intent is just really out of the norm.

Additionally, requesting a consumer to sign preliminary documents and an intent to proceed sometime later down the road in order to approve the loan in my mind borderlines on a UDAAP. There are no signature requirements in the regulation and documenting this after the fact is borderline mortgage fraud. If you need these signed in order to proceed, then you should get the signatures before proceeding.
Posted By: David Dickinson

Re: No Response from Applicant - Deny or WD? - 11/29/17 10:05 PM

Quote:
I think the point is....how do you approve a loan without an appraisal and title work....and how did you get those without getting intent to proceed first?

You most certainly can approve a loan without an appraisal and title work. You simply say "we'll do this if everything verifies." Some see that as an approval. I'm not saying you have to, but there is no definition of "approved" or "conditional approval". Verification is a prudent thing, not a compliance issue. If I tell someone "we can do this loan" then how are they not approved? I prudently would want to verify everything. If things don't verify like the consumer stated, then you have the right to deny the application. Just because you said "yes" doesn't mean you can't say "no" later.
Posted By: swiggles

Re: No Response from Applicant - Deny or WD? - 12/05/17 06:53 PM

....what David said........
Posted By: KTMiteComply

Re: No Response from Applicant - Deny or WD? - 02/15/18 01:34 PM

Originally Posted By Dan Persfull
our LO will send out early disclosures and the applicant will just never respond to us.

We include a cover letter that informs the applicant what information we need to move forward with the application. We inform them that if we don't receive the information by a certain date then we will assume they have chosen not to proceed with the loan request and report it as closed for incompleteness.


I know I've had this discussion before but I'd like to take this a little further to see how you finish this process. We are also looking to implement where we do a cover letter requesting docs etc in order to proceed with a drop dead date...say like 20 days. So here is my thought dilemmas and would like to hear more about everybody that does it this ways process.

So lets say the Application was taken on 12/1/2017. We've given this Borrower the cover letter stating all we need by 12/21/2017 to proceed. REGB 30 day notification has been satisfied and all is good.

Now its 2/15/2018 and we've already received enough information to send to UW for a "Conditional Approval" and the file ihas been sent back to Processing Dept to wait on the additional conditions to be sent in to proceed along with waiting on Title/Appraisal etc.

Time rocks on and Borrower is now radio silent. Now before I ask this next question I want to put out there that the only time we ever code a file as Approved Not Accepted is when we have a FINAL Approval...that is per our Compliance Dept, so I can't even consider this option when I ask my question.

Mgmt wants us to go back and close out this file as Incomplete based upon that original letter in our cover letter, which in this case would be 12/21/2017 and this date would code as our Final Action date as Incomplete. My argument to them is that we absolutely can NOT do this as this will affect our 2017 HMDA LAR that's could possibly have already been filed or in the process of being scrubbed and will more than likely be missed. I said if we are that far along in the process and are still requiring more information that we've not received to move to Final Approval and the Borrower has gone silent, then we need to send out another NOI and Incomplete based upon that NEW NOI we've sent with a new drop dead date, but they state they want to get away from having to send additional NOI's. I honestly just don't see how this can be done but wanted to check with all of you who have implemented these procedures and get your thoughts.

Thanks!
Posted By: Truffle Royale

Re: No Response from Applicant - Deny or WD? - 02/15/18 04:41 PM

Did you receive anything from the borrower after you sent the NOI or have they been radio silent all along? If all the information you're received to send this to UW was generated on your end, I think you can just go ahead and close the file for incompleteness now BUT YOU'D USE TODAY'S DATE. Action taken is when YOU take the action, not when the letter to the borrower tells them you can. We've sent out NOIs and opted to give extra time past the drop dead date and when nothing occurs, we close out the file using the current date.
Posted By: KTMiteComply

Re: No Response from Applicant - Deny or WD? - 02/15/18 04:49 PM

Originally Posted By Truffle Royale
Did you receive anything from the borrower after you sent the NOI or have they been radio silent all along? If all the information you're received to send this to UW was generated on your end, I think you can just go ahead and close the file for incompleteness now BUT YOU'D USE TODAY'S DATE. Action taken is when YOU take the action, not when the letter to the borrower tells them you can. We've sent out NOIs and opted to give extra time past the drop dead date and when nothing occurs, we close out the file using the current date.


Heya Truff,

I'm thinking in the scenario as we did receive some information that we were able to send to UW to get a "Conditional approval" but not everything required to go to a Final approval and somewhere along that way after receiving some initial info they went silent.

I told them there is no way we can use the "drop dead" date when Incompleting these files b/c we will be in a mess with our LAR if we did, especially during the first of the year when the drop dead date is last year and/or when we have to go to quarterly reporting.

So you guys send out an NOI in your welcome letter with disclosures as well to satisfy the initial REGB clock? Did you run in to any unseen challenges when you implemented this?

Thanks for your help!
Posted By: Truffle Royale

Re: No Response from Applicant - Deny or WD? - 02/16/18 03:36 PM

KT, we put the drop dead date on at the suggestion of our examiners. It satisfies the reg clocks if nothing happens after we send the letter.
In the case you outline, the info you received from the borrower after sending the letter, negated that drop dead date and moved the 30 day clock out. When this happens here, we remove the items received from the list and send out another letter with a new drop dead date. We pull a report that shows how long files have been sitting and we work through them regularly to close out the ones that have passed the date.
In all honesty, the effect to your LAR of closing out the file with the drop dead date in 2017 is secondary in comparison to the procedural issues you seem to have. (of course, imo, if you've filed already, there's no way they can use the 2017 date, period. eek ) One hard and fast compliance rule for me is Never Backdate Anything! If you're closing out a file today, you cannot date it to have been done two months ago.

Hope that helps.
Posted By: Red Raiders

Re: No Response from Applicant - Deny or WD? - 05/21/20 04:26 PM

We have a similar situation now and not sure what action taken for HMDA is. Applicant applied, we sent out earlies with list of items we needed. Applicant sent back all of our requested items and we had intent to proceed as well. Underwriting was good (although we haven't ordered appraisal). Applicant all of a sudden isn't responding to phone calls or emails. What is our action taken?
Posted By: Jerod Moyer

Re: No Response from Applicant - Deny or WD? - 05/21/20 04:47 PM

Based on what's been stated (IMO it doesn't appear you ave "fully approved" the applicant - see commentary to §1003.4(a)(8)(i) #3) and assuming you don't hear anything back from them (i.e. express withdrawal), you can either deny the application or send them a notice of incompleteness.
Posted By: Jerod Moyer

Re: No Response from Applicant - Deny or WD? - 05/21/20 04:52 PM

That said, I could go approved not accepted if you were to tell me that the applicant is fully approved (all underwriting and creditworthiness conditions have been met) and the only things outstanding are customary commitment or closing conditions [Commentary to §1003.4(a)(8)(i) #13(ii)].
Posted By: Red Raiders

Re: No Response from Applicant - Deny or WD? - 05/21/20 05:01 PM

Thanks for the response, Jerod. We didn't have an appraisal so I'm not thinking ANA would work here. I think I'm just struggling with (a) the applicant gave us everything we asked for in our "incompleteness" letter with the earlies so sending another incompleteness letter seems odd and (b) I'm not sure what the denial reason would be if we picked denial.

I'm sure I'm making this way harder than it should be.