HMDA Action Taken Codes: Originated, Denied, Withdrawn, or Incomplete

HMDA reporting asks a lender to record what happened to a covered application or loan. The action-taken field is a compact code, but the decision can be subtle when a borrower withdraws, a lender makes a counteroffer, or the file is missing information. A reliable answer follows the event sequence and the definitions in Regulation C, then applies the code and date instructions.

The principal action categories

Regulation C Appendix A lists the common codes: loan originated; application approved but not accepted; application denied; application withdrawn; file closed for incompleteness; loan purchased; and certain preapproval outcomes. For NMLS exam questions about a standard application, the first five are especially important. A purchased loan is reported as purchased rather than treated as an origination by the purchasing institution.

‘Loan originated’ generally means the institution made the covered loan. When the lender makes a counteroffer on different terms and the applicant accepts, the application is reported as originated if the loan closes. If the applicant turns down or does not respond to a counteroffer, the reporting treatment is generally denial, rather than approved but not accepted, because the lender did not approve the loan on the original requested terms and the applicant did not accept the alternative.

Approved but not accepted

Use approved but not accepted when the institution approves the application and agrees to extend credit, but the applicant or intermediary does not accept the approval or commitment within the specified period. This is different from a preapproval request and different from a conditional approval where material underwriting or creditworthiness conditions remain unsatisfied. The comment to §1003.4 explains how conditions affect the code.

If the lender approves on the requested terms and the consumer simply lets the offer expire, approved but not accepted is a natural fit. If the consumer expressly withdraws before the lender makes a credit decision, use withdrawn. If the lender denies the application first, later withdrawal does not erase that earlier denial. Sequence matters.

Withdrawn versus denied

A withdrawal must be express and occur before the institution makes a credit decision denying or approving the application, or closes the file for incompleteness. A borrower who says ‘I no longer want the loan’ before a decision has been made can result in a withdrawn code. If the lender has already denied the application, it reports denied even if the applicant later says they are no longer interested.

Do not code an application as withdrawn just because the borrower stops responding. If the lender requested missing information, sent the required written notice of incompleteness under Regulation B, and the applicant failed to respond within the stated period, the lender may report the file closed for incompleteness. A file closed for incompleteness is not interchangeable with a denial; the lender has not made a credit decision on the merits.

Date of action taken

The action date is the date of the event being reported, with specific flexibility for some categories. For an originated loan, report the settlement or closing date. For a purchased loan, report the date the institution purchased it. For denials and files closed for incompleteness, the institution may generally use the date it took the action or the date it sent the notice. For withdrawals, it may use the date the express withdrawal was received or the date shown on a written withdrawal. For approved-but-not-accepted loans, a reasonable date such as the approval, offer-expiration, or file-closure date may be used, with consistent practice.

Preapproval requests are different

HMDA does not report every preapproval request. Regulation C includes a limited set of reportable outcomes for covered home-purchase preapproval programs, such as a denied request, one that results in a home-purchase loan, or an approved request that is not accepted. A withdrawn or incomplete preapproval request is generally not reported. Do not apply ordinary application codes to a preapproval without first checking whether the request is reportable at all.

Decision tree

• Did the institution make the loan? Report originated and use settlement or closing date.
• Was the application approved on terms the applicant did not accept? Consider approved but not accepted, subject to the rule’s conditions.
• Did the institution deny before the applicant withdrew? Report denied.
• Did the applicant expressly withdraw before an approval, denial, or incomplete-file closure? Report withdrawn.
• Did the institution send a Regulation B notice requesting missing information and then close the file when the applicant did not respond? Report closed for incompleteness.
• Was the loan acquired after origination by this institution? Report purchased, if covered.

Example

A borrower applies for a purchase mortgage. The lender requests two missing bank statements and sends a written incompleteness notice with a response deadline. The borrower never responds. If the lender closes the file following that notice process without making a credit decision, the likely HMDA action is closed for incompleteness. If the lender instead denies the application based on verified inability to repay before the borrower withdraws, denial is the accurate action. If the borrower expressly cancels before either event, withdrawal may apply.

Exam takeaway

Write the event timeline before selecting a code. Identify who acted, whether a credit decision was made, whether withdrawal was express, whether an incompleteness notice was sent, and whether the loan closed. Then choose the action date from the correct rule. HMDA action taken reports the institution’s action; it is not the same as an ECOA adverse-action notice or the TRID disclosure timeline.

Choose the code from the application’s actual outcome

HMDA action-taken reporting describes what happened to an application or covered transaction. An originated loan is reported as originated when the covered credit results in a loan. A denial means the institution declined the request. A withdrawal is the applicant’s withdrawal before the institution made a credit decision. An application closed for incompleteness reflects the institution’s determination that required information was not supplied after the applicable process. A file that is merely delayed or still under review is not automatically one of those completed outcomes.

The date follows the event

The action-taken date is tied to the action being reported: for example, the date of origination, denial, withdrawal, or the relevant incomplete-file decision. It is not automatically the date the application was first received, the date an MLO last spoke with the applicant, or the date the loan later funded if a different reportable action occurred. Institutions need consistent procedures for capturing the event date and the reason a file closed.

Distinguish withdrawal from incompleteness

If an applicant affirmatively tells the lender to stop processing, that points toward withdrawal. If the applicant does not provide requested information and the institution closes the file under its incomplete-application process, that points toward an incompleteness action. A denial is a creditor decision, not a synonym for any file that fails to reach closing. The institution’s records and communications should support the selected code.

How to solve a timeline question

Write the sequence in order: application received, requested information, applicant response, underwriting decision, and final file status. Identify who caused the application to stop and whether the creditor actually made a credit decision. Then select the action code and date based on the final reportable event. Also determine whether the transaction and institution are otherwise within HMDA coverage; an action code does not make a noncovered application reportable.

Recordkeeping and quality control

A useful review compares the action code to the file notes, adverse-action notice if applicable, withdrawal communication, missing-item notices, and final loan status. Quality checks should flag impossible combinations, such as a denial code without a documented credit decision or an originated loan with no origination date. The regulatory data field is concise, but accurate reporting depends on a consistent operational trail.