Credit score disclosures and pre-qualifications

Are we required to send credit score disclosures and the Notice to Home Loan Applicant when someone asks us to pre-qualify them for a home mortgage loan?

If you pull a credit report, then yes.

We had to create a special procedure for providing these much earlier than other early disclosures because our prequals are not considered completed applicaitons. Since you have to provide the notice as soon as reasonably practicable after pulling a credit report, you need to make sure that the notice is being provided timely.

Thanks, that is the way I was leaning but wanted to get more opinions.

It's a close call, but I would beg to differ on this. Section 609(g)(1) of the FCRA says a lender has to provide a credit score disclosure/NTHLA "in connection with an application initiated or sought by a consumer.." It doesn't say "request" or "inquiry," it says "application." Since the term "application" isn't defined in the FCRA, I believe you can look to other regs (Reg B, RESPA) for guidance. If you are not treating your prequals as "applications" under some other Reg's definition and are not providing the other disclosures (GFE, early TIL, etc.) required within 3 days of an "application," then it could be argued you don't have an "application" and don't have to provide the NTHLA either.

If you've already set up a process to provide the NTHLA earlier, then I'd probably stick with it. Otherwise, I might think about this again.

Good luck.

I disagree - you cannot use "other" regulations to determine whether or not a "prequal" is or is not an application for credit. More over, you can't just choose which regulation's definition that you choose to use. Are you indicating that a "prequal" is not an application under Reg. B?? Are they not initiating or seeking a decision on credit to be secured by 1 to 4 units of residential real property? I think this is a dangerous road to drive.

I agree with Randy.

You are giving a conditioned approval on the prequal application and you are using the credit score in that conditional approval therefore the disclosure requirements of 609(g) would apply IMHO.

And as Randy alluded, how can you justify the prequal is not a request (application) for a credit decision? The other regulations do not discount prequals as an application for credit. They define an application for disclosure requirement purposes particular to their provisions.