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:
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
. 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.