Here are the facts:
Customer has a loan with us, but would like to refinance the loan on the secondary market in order to get a long term fixed rate.
Customer approaches loan officer with the request. Loan officer takes an application and discusses the application with the borrower. Borrower has had a bankruptcy within the last 5 years, but since bankruptcy has paid as agreed.
Lender contacts the secondary market lender to discuss the application. Secondary market lender says that the application may qualify. Instead of submitting the application elctronically, the secondary market lender tells the lender to submit the applicaiton manually.
In the meantime, the lender produces prelminary documents and mails them.
Secondary market lender finally gets back to the lender and states that the application does not qualify.
Secondary market lender is stating that they did not make a credit decision and therefore they will not report the transaction.
Since the customer already has a loan with us, there is not another product that we could offer the customer in-house that would help them financially and therefore, we did not evaluate the secondary market credit application.
We are having trouble determining what to do with this application. I think you could argue that this was a prequalification. But on the other hand, I think you could argue that this is a declined loan application which the secondary market lender should report. But could there be a scenario in which we should report the loan (i.e. - you have applied for a loan that we do not offer)?
Any help would be appreciated.