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#1710326 - 06/14/12 03:02 PM Pre-qual with Property Address
Believing... Offline
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In the mountains
Is it ever acceptable to have a prequalification request with a property already identified?

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#1710955 - 06/15/12 04:15 PM Re: Pre-qual with Property Address Believing...
rlcarey Online
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rlcarey
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Galveston, TX
No.
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#1724981 - 07/30/12 07:56 PM Re: Pre-qual with Property Address Believing...
MyScamper Offline
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I am having this exact discussion now. Can you point me to where in the regulation I can quote the prohibition?

Thanks.

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#1725091 - 07/31/12 01:42 AM Re: Pre-qual with Property Address Believing...
rlcarey Online
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rlcarey
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Galveston, TX
Well, I guess it might exactly depend on the context of your question, but if you have already identified a property, why would you need a prequalification?
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#1725204 - 07/31/12 02:19 PM Re: Pre-qual with Property Address Believing...
Dan Persfull Offline
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A pre-qualification request is not an application for HMDA reporting purpose however Reg. C in 1003.2 defines an application.

Application.(1) In general. Application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested.

If you have all the information you normally require for the type of credit requested then you have an application that is subject to reporting.

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#1725386 - 07/31/12 04:52 PM Re: Pre-qual with Property Address Believing...
CalifDreamin Online
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CalifDreamin
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Far from Calif
Having this same problem here lately. I'm seeing more and more where loan officers are issuing "prequal letters" when we have a property address (they just state in the letter that they are prequalifying customer based on the preliminary unverified information vs. our preapproval which has a written commitment based on verified information). I think this just really muddies the file! I'm going ahead and having us report them for HMDA.
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#1725633 - 07/31/12 09:14 PM Re: Pre-qual with Property Address Believing...
MyScamper Offline
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The context is the customer is shopping rates on a refinance and we have the 6 items that constitute an application under RESPA. The LO is calling it a prequalification. My understanding of a prequal is that you cannot have identified a property, therefore it is limited to purchases. "Prequalification" to me connotes more than just quoting a rate; it includes a limited commitment that if the borrower submitted an application, they would be approved subject to certain contingencies. I am concerned about calling inquiries for rates on refis a prequalification. Am I overreacting?

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#1725663 - 08/01/12 01:03 AM Re: Pre-qual with Property Address Believing...
rlcarey Online
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Galveston, TX
Am I overreacting?

No and you have to get these processes under control or it is going to eat your lunch. Even if it is a pre-qual program, these are still applications for credit under Regulation B.

The FDIC published this is 1996 and it is still very relevant:

http://www.fdic.gov/regulations/compliance/mortgage/preq2.pdf

If you have the minimum information under RESPA, then you have an application subject to RESPA and early TILs.
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#1725854 - 08/01/12 03:36 PM Re: Pre-qual with Property Address Believing...
MyScamper Offline
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Between here and there
Thanks for the link. I tried to pull this off the FDIC website yesterday and could not.

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#1725859 - 08/01/12 03:41 PM Re: Pre-qual with Property Address Believing...
CalifDreamin Online
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CalifDreamin
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Far from Calif
Yes, thank you, Randy! I actually laughed when I saw you post that because I agree it is still very helpful and relevant. However, in an exam in 2007, the examiner and I had been going back and forth on this issue of prequals and preapprovals. I brought that out to show him and support what I was trying to say, and he specifically said, "That is an old publication and no longer relevant." Ultimately, he came over to my side, but it took quite a few discussions.
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