When I was on United Yorkie Rescue ( I was regional director) I would get the applications to screen. I did the background check and would get volunteers to do home checks. I would then go over everything before calling to tell them either they were accepted or not. I was very honest as to why they were not chosen. I think that's the best way to go.
You did the right thing in not selecting the family that is for sure, but just be honest if she calls back.
