Me again! I am looking for information on doing Pre-approvals under RESPA reform with the new FAQ addressing this (our pre-approvals meet the HMDA definition- full credit approval, no outstanding underwriting conditions- all income/assets documented and verified, approval subject only to a purchase contract and appraisal). We require the borrower to provide us income/asset documentation, which HUD states we cannot require until the borrower has been provided a GFE. When the borrower gets a property, we provide a GFE. Is anyone out there doing pre-approvals? If so, does your process follow our outline above?

We're doing them but don't have an official policy/process.

Do you obtain income verifications prior to the GFE? This is making it difficult for consumers who want to know "What can I afford" without having a property in mind. To GFE or not GFE..that is the question.

The days are getting really long.......I dream RESPA

We have dropped the pre-approval program, based on the most recent HUD Q and A. I think it will be up to the big banks to argue that RESPA does not apply if a property is not identified, and allow preapprovals once again to be part of business models. Based on Compliance Conferences I have attended, the Compliance presenters have advised against issuing a GFE until you know what you are dealing with, including in terms of property. We won't issued a GFE until all required circumstances apply (the 6), therefore we cannot obtain paystubs and bank statements, therefore we cannot issue a preapproval (in the past we have required verification documents to issue preapprovals or committments subject to finding a property). We will be issuing pre qualification letters.

I'm on board with you, MoMan. Back in the day, we had a preapproval program that required full verification. We nixed the whole thing effective 1/1, based upon what HUD had put out at that time. To me, the new FAQ's just solidified our position. We now just issue prequalification letters, which work fine in our market, and save the GFE for after a property is identified.

we do the same as Wren...but add a "cost estimate" sheet that includes some of the "real" costs that HUD removed from the new GFE (real estate taxes, as an example)...even with no identified property and an estimate loan amount...we hope that this will provide potential borrowers some good information about the real cost of getting into a mortgage.

We shelved our full Pre-Approval program 1/1/10 and now work with a glorified Pre-Qual program. We do not obtain any supporting documentation, but run credit and DU, then will provide a Pre-Qual letter full of contingencies. We do not issue a GFE/TIL. We verbalize some estimated costs, but do not provide written worksheets or estimates. It is a warm and fuzzy (generally enough for their Realtor) but with contingencies we have an out if things do not verify. These are subject to Reg B and handle accordingly.