We have defined an application to be Name, Monthly income, social security number, property address, value of subject property, loan amount AND receipt of a completed and executed mtg. application.

We issue PreQUALIFICATION letters on purchases when asked by a client (not preapproval letters) and are being advised that we need to send adverse action letters to applicants who could not receive a PreQUALIFICATION letter based on the credit report only (credit score too low). Since the credit report is only one element of the completed application I dont see how we could issue an adverse action since this would not be considered an application. How would we force the person to apply and obtain the remaining elements of a completed application?

Am I correct?

One thing to remember with Reg B is that you have an application when you have enough information to make a decision. Even if you don't have a complete "application", if you have enough information to make a credit decision, and you have communicated that decision, you have an application. Look at the commentary to 1002.2(f)