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#1578251 - 07/14/11 07:39 PM Mortgage Loan Prequal - Doc Retention ?
Dallas Fan Offline
100 Club
Joined: Feb 2008
Posts: 219
RIC
Scenario:

We receive a request for a mortgage loan prequal via phone, email, or possibly even the internet.

-No property listed or identified.
-No signed application.
-Credit is pulled but no verification of any other info.
-We issue a general prequal statement saying they appear to be qualified, please contact us when you are ready.


I know that we would be subject to Reg B and FCRA in terms of a possible adverse action notice but if not adverse and we never hear back from the potential borrower is there any further action required, or more importantly, is their any specific requirement to retain the file docs? i.e. the unsigned loan application which is very incomplete and Credit report they reviewed.

Looks like Reg B 202.12 is the applicable law but not sure it would apply here.??

This tends to happen from time to time when the potential borrower either loses interest, goes to another lender, or just goes away.

Thanks!
Last edited by Dallas Fan; 07/14/11 09:00 PM.
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Lending Compliance
#1578379 - 07/14/11 09:54 PM Re: Mortgage Loan Prequal - Doc Retention ? Dallas Fan
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Do you ever follow up on these? Generally, a loan officer will contact the potential borrowers and ask them if they are still interested. One of two things happen:
1. The borrowers tell you they are no longer interested or got financing elsewhere. If so, this is withdrawn. Nothing further required of your bank.
2. They say they are still looking. Again, nothing is required from the lender. You can tell them they need to update their info or not. That's up to bank policy.
_________________________
David Dickinson
http://www.bankerscompliance.com

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#1578416 - 07/15/11 01:25 AM Re: Mortgage Loan Prequal - Doc Retention ? David Dickinson
Dallas Fan Offline
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Joined: Feb 2008
Posts: 219
RIC
My understanding is that these are the prequals from potential borrowers that the LO's basically gave up on pursuing. One of our loan documentation staff had asked me what to do with files.

I think this is basically a problem of the LO's not closing them out and clearing their pipeline. I am fairly new here but I think I will need to implement a procedure holding the LO's accountable for closing the files out after a certain timeframe.

I guess my question is do we need to retain these files for a given timeframe such as the 25 months required under adverse actions or can we just destroy them since there was never adverse action taken? I was leaning towards retaining since we did pull credit. If anyone ever came back and questioned it at least we would have something.

Thanks..

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#1578869 - 07/15/11 07:09 PM Re: Mortgage Loan Prequal - Doc Retention ? Dallas Fan
Dallas Fan Offline
100 Club
Joined: Feb 2008
Posts: 219
RIC
Bump

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