Under Regulation C / HMDA, what are customary loan-commitment or loan-closing conditions?

Compliance > Regulation C - HMDA > FFIEC FAQs
Q:  The commentary [Reg. C / HMDA] indicates that an institution reports a "denial" if an institution approves a loan subject to underwriting conditions (other than customary loan-commitment or loan-closing conditions) and the applicant does not meet them. See comment 4(a)(8)-4. What are customary loan-commitment or loan-closing conditions?
 
A:   Customary loan-commitment or loan-closing conditions include:
  • clear-title requirements,
  • acceptable property survey,
  • acceptable title insurance binder,
  • clear termite inspection, and,
  • where the applicant plans to use the proceeds from the sale of one home to purchase another, a settlement statement showing adequate proceeds from the sale.
 
See comments 2(b)-3 and 4(a)(8)-4. An applicant's failure to meet one of those conditions, or an analogous condition, causes the application to be coded "approved but not accepted."
 
Customary loan-commitment and loan-closing conditions do not include:
 
(1) conditions that constitute a counter-offer, such as a demand for a higher down-payment;
(2) underwriting conditions concerning the borrower's creditworthiness, including satisfactory debt-to-income and loan-to-value ratios; or
(3) verification or confirmation, in whatever form the lender ordinarily requires, that the borrower meets underwriting conditions concerning borrower creditworthiness.
 

This can be found in FFIEC’s FAQs on HMDA-related questions, which can be found at:  http://www.ffiec.gov/hmda/faq.htm

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