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#2206131 - 02/14/19 04:34 PM No Preapproval Program and Reporting
LoveHMDA Offline
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Joined: Nov 2005
Posts: 273
We do not have a preapproval program here at my financial institution. We do have customers that request preapproval without a designated property to purchase. Since we have no program and there is no designated property to purchase, do I still report these, or do I treat these like prequals and not report? Does it matter if the loan request was denied, approved not accepted, withdrawn or closed for incompleteness? We require the six items (ALIENS) to have a completed application.

Any help or guidance you can provide, will be greatly appreciated!

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#2206142 - 02/14/19 04:46 PM Re: No Preapproval Program and Reporting LoveHMDA
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
If you don't have a preapproval program, they are prequalificaitons. HMDA is not "triggered" by prequels. Don't report.

No house = no HMDA (for you).

Here's the citations to support this:

A prequalification request is a request by a prospective loan applicant (other than a request for preapproval) for a preliminary determination on whether the prospective loan applicant would likely qualify for credit under an institution’s standards, or for a determination on the amount of credit for which the prospective applicant would likely qualify. Some institutions evaluate prequalification requests through a procedure that is separate from the institution’s normal loan application process; others use the same process. In either case, Regulation C does not require an institution to report prequalification requests on the loan application register, even though these requests may constitute applications under Regulation B for purposes of adverse action notices. [Commentary to §1003.2(b) #2]

A request for preapproval… is an application under this section if the request is reviewed under a program in which the financial institution, after a comprehensive analysis of the creditworthiness of the applicant, issues a written commitment to the applicant valid for a designated period of time to extend a home purchase loan up to a specified amount. [§1003.2(b)(2)] To be a preapproval program… the written commitment… must result from a comprehensive review of the creditworthiness of the applicant, including such verification of income, resources, and other matters as is typically done by the institution as part of its normal credit evaluation program. [Commentary to §1003.2(b) #3]
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David Dickinson
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#2206154 - 02/14/19 05:07 PM Re: No Preapproval Program and Reporting LoveHMDA
LoveHMDA Offline
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Joined: Nov 2005
Posts: 273
Thank you David, appreciate it!
I failed to mention that we may (very rare) do a preapproval letter on ad hoc basis. If we do the letter, would that require us to report?

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#2206159 - 02/14/19 05:16 PM Re: No Preapproval Program and Reporting LoveHMDA
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
No. You still have to have a "program". Reg C states:
If a financial institution does not regularly use the procedures specified… but instead considers requests for preapprovals on an ad hoc basis, the financial institution need not treat ad hoc requests as part of a preapproval program... A financial institution should, however, be generally consistent in following uniform procedures for considering such ad hoc requests. [Commentary to §1003.2(b) #3]

The "problem" is they never clearly define what's ad hoc and what's a program. If you feel like you're teetering between ad hoc and a program, I encourage you to discuss this with your regulators. It would be bad to have them interpret it differently.
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#2206162 - 02/14/19 05:21 PM Re: No Preapproval Program and Reporting LoveHMDA
LoveHMDA Offline
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Joined: Nov 2005
Posts: 273
Gotcha! Thanks again David, appreciate it!

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#2248641 - 02/03/21 07:40 PM Re: No Preapproval Program and Reporting LoveHMDA
complyorelse Offline
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Joined: Nov 2007
Posts: 432
U.S.
Need some clarity on something. We do not have a Reg C preapproval program....period. For the field Preapproval requested or Preapproval not requested, wouldn't we always select Preapproval not requested?

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#2248642 - 02/03/21 07:52 PM Re: No Preapproval Program and Reporting LoveHMDA
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,457
Bloomington, IN
Yes -

Paragraph 4(a)(4)
1. Request under a preapproval program. Section 1003.4(a)(4) requires a financial institution to report whether an application or covered loan involved a request for a preapproval of a home purchase loan under a preapproval program as defined by § 1003.2(b)(2). If an application or covered loan did not involve a request for a preapproval of a home purchase loan under a preapproval program as defined by § 1003.2(b)(2), a financial institution complies with § 1003.4(a)(4) by reporting that the application or covered loan did not involve such a request, regardless of whether the institution has such a program and the applicant did not apply through that program or the institution does not have a preapproval program as defined by § 1003.2(b)(2).
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2248647 - 02/03/21 08:02 PM Re: No Preapproval Program and Reporting LoveHMDA
complyorelse Offline
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Joined: Nov 2007
Posts: 432
U.S.
Thank you, Dan! I have someone pressing me really hard on this so I started second guessing. That can easily happen in this complicated regulation.

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