I have a question regarding HMDA and pre-approvals. I am not sure if what we have constitutes a pre-approval or not. This is a two-part question and the first part is whether the letter that we prepared constitutes as an actual pre-approval. Here is how the letter reads:

This letter is being written at the request of Mr. (Customer). Mr. Customer has requested, and we have preliminarily approved, a loan in the approximate amount of $220,000.00 for the purchase of some real estate. Final approval is subject to final title work, etc., but no obstacles are expected. Mr. Customer has been a valued customer of (bank) for over 30 years and all his accounts and loans have always been handled in a prompt and businesslike manner. Sincerely……

The above letter was provided to the customer in January.

The second part of the question has to do with the property securing the resulting loan. The loan (funded today) was not secured by the property that was purchased; it was secured by a rental dwelling already owned by the customer. Does the property securing the loan factor into a pre-approval or not, in terms of it maybe not being a pre-approval because it isn’t secured by the property being purchased? It is my understanding that for HMDA purposes, when a loan is secured by one property to purchase another, the property securing the loan is the property that is reported. I wasn’t sure whether the same would be true for pre-approvals, provided this is an actual pre-approval.

Any guidance anyone could offer would be greatly appreciated! Thank you!

It all depends what your etc. entails in your letter.

That is literally how the letter reads. Some info that might fill some of that in for you: We did not get a written application; no credit report was done; an appraisal was not done (except for one on file from a previous loan); and financial info was not updated. The title work appears to be all that "etc." entails. Also, this purchase loan is secured by a junior lien on the rental property; we hold the 1st mortgage, as well. Anything else that would be helpful for you to know?

Do you have a pre-approval program as outlined in GIR? If this is just a loner, I'd tend to say it sounds more like a pre-qual which is not reportable.

Then it does not constitute a preapproval letter under 203.2(b)(2) and its Commentary.

Thanks!