Our institution has defined a prequalification from an application using the variable of a credit report. If we pull a credit report, we then have an application. If there is no credit report, then we have a prequalification. On applications where a property has not been identified and we deny the transaction, we enter this into our LAR as application denied.

When reporting our 2006 data we received a QC edit # Q030 = reporting of property information or entries of N/A in the property information fields.



Since we have defined our applications by the variable of a credit report, and not by having a property identified, can these QC edits remain and will our institutions policy of what we consider an application vs. a prequalification satisfy a HMDA audit?

First, "Prequalification" is a defined term. Refer to the Commentary to §203.2(b)#2. I don't believe you can define a prequalification as one in which you have no credit report.

Second, what you're saying is that as long as a loan officer doesn't pull a credit report, they don't have an application. I don't think that's OK either. "Application" is defined in §203.2(b). Also, the commentary to this section instructs you to look at Reg B's definition of "application" where it is further defined.

An application is received and THEN you pull a credit report. Not having a credit report doesn't make it not an application.

I'm not sure the rest of your question is relevant in light of this info. (not trying to be rude, just don't think I can help you).

Also, does your institution have a preapproval program? This makes a big difference on how to answer your questions.

I highly recommend you purchase the CD-ROM training I did on "Applications: Preapprovals and Prequalifications". You can find more info. here:
http://www.bankersonline.com/store/product_info.php?products_id=1103

David... thanks for the reply. Looks like I posed my question badly. We reviwed the outline for the webcast yesterday.

We are having our most trouble with the HMDA "preapproval".

First - We have not written preapproval program, but from time to time issue commitment letters. Some with credit conditions and others with only property conditions. Our internal auditors state that if we issue any commitment letters that consitutes having a preapproval program. Is there a better definition of what consitutes a preapproval program?


Second - Can an application with no proptery identified be just "denied" and not a "preapproval denied"?

If you have any input or direction to other referances to share, that would be great. Thanks

First, your auditor would be wrong. The reg states to have a preapproval program you must have a written program.

Second, if you don't have a property and don't have a written preapproval program then you have prequalified them and the applidation is not reportable. It is however, an application for Reg B purposes and must be handled as such.

What KC said.