We do not have a formal 'Pre-Approval' program here at the bank and when our Sr Loan Officer sends a Pre-Qual letter to a customer or the RE agent for the customer he just states that the customer will be approved for a loan amount of $?$? He may or may not pull a credit report....these loans are all 'portfolio' and the RE agents know that when the Sr. Loan Officer says he will approve a loan for 'so-and-so' they know the loan will go through....My question - does anyone have a sample pre-qual letter that satisfies the RE Agents. And 2 - do you think this would be considered a Pre-Approval program?
home town banker

We do not have a preapproval program either. We have a prequalification letter that we frequently use. Some realtors are fine with it; others want a preapproval letter. And I was once told that the sellers wanted to see a preapproval letter, not a prequal.

Send me a private message, and I'll be happy to fax or e-mail you a copy of our letter, if you want it.

Thanks Steve - I have sent a private message....In regard to the 2nd question - do you think what the Sr. LO is doing constitutes a 'preapproval program'?

You stated that your bank does not have a formal preapproval program, but it seems as though the realtors treat your senior loan officer's prequalification as a preapproval. Technically, I would think that is not a formal program.

I'm going to play devil's advocate - -

Quote:

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our Sr Loan Officer sends a Pre-Qual letter to a customer or the RE agent for the customer he just states that the customer will be approved for a loan amount of $?$?

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This sounds like the SLO is pre-approving the applicant to me. You may have unintentionally established a pre-approval program.

BUT - the SLO did not perform 'full' underwriting; nor include a designated period of time to extend a loan.

I would recommend that you draw your SLO's attention to Section 203.2(b)(2) of the regulation (found on page C-1 of the Getting It Right guide), where preapproval programs are defined. I would also call his attention to the Official Staff Commentary on that section (found on page D-2 of the GIR Guide).

While he may not have intended to establish a formal preapproval program, it appears that his prequalification letters function like preapproval commitments. Whether or not you have ipso facto a formal program, I am not sure. However, I would respectfully suggest that revisiting the issue with the goal of clarity would be most beneficial.

Thanks Steve & Dan - I will take your advice