Q: An applicant applies for a HMDA loan. The bank pulls the credit report and qualifies the borrower based on the information provided. The borrower decides not to continue with the application prior to an appraisal being ordered. Should we report this application as withdrawn, approved not accepted, or incomplete?
A: The answer depends on whether the bank has made a credit decision. If the institution requires the appraisal before making its credit decision, the application should be reported as withdrawn. Based on the HMDA instructions, the institution reports an application as “approved not accepted” if the institution has made a credit decision before the borrower withdraws the application. In addition, an institution would report an application as incomplete if it had sent a notice of incompleteness under §202.9(c)(2) of Regulation B and the applicant did not respond to the request within the specified time period.
This can be found in - FAQ#16 of the FAQs. The Federal Reserve Board FAQs can be found at: https://consumercomplianceoutlook.org/2011/second-quarter/hmda-and-cra-data-reporting/