HMDA Classification Of Action Taken

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Question:

I am the HMDA and CRA coordinator of the bank I work for. When reviewing the HMDA file of one of our region's bank, I found that on about 15% of the applications, the action taken was #5 (file closed for incompleteness). I questioned the person in charge of this file and she told me that after the decision on the application was made, they sent a letter with some conditions to the applicant and if the applicant does not answer that letter, they close the file and classify it as incomplete. My concern is that if the decision was already made, why don't they classify the application as approved but not accepted? Please help me to clarify this confusion.

Answer:

From the HMDA Getting it Right booklet:

4. Action taken—conditional approvals. If an institution issues a loan approval subject to the applicant’s meeting underwriting conditions (other than customary loan commitment or loan closing conditions, such as a “clear title” requirement or an acceptable property survey) and the applicant does not meet them, the institution reports the action taken as a denial.

First published on BankersOnline.com 7/21/03