"Applicant Changed Mind"- Reason for Denial?

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Question:

In handling the review of a withdrawal file, the branch stated the reason for withdrawal as the "Applicant changed mind" because they didn't want to pay any fees for closing. Should this have been a denial?

Answer:

If the credit decision had already been made and approved before the applicant changed their mind, it would be approved but not accepted. If the applicant changed their mind before the credit decision was made, it would be withdrawn. In both cases, the files should be retained for 25 months and that's typically done by including them with the denied applications. Also, as a best practice, it's good to document withdrawals on an adverse action notice as it serves as a means to confirm the applicant's intentions.

First published on BankersOnline.com 9/17/12