Are pre-qualifications HMDA reportable?

Posted By: solbrillante

Are pre-qualifications HMDA reportable? - 01/16/15 08:07 PM

We don't have a pre-approval program as defined in HMDA. We have a few applications customers submitted and they were either withdrawn or denied for credit. They never provided a property address. They did not have a preperty to purchase yet and they were just shopping around. It is my understanding that when there is no property address, it's not an application for HMDA purposes ; therefore, not reportable. I pulled this from a 1996 FDIC Guide. Is this no longer the case?
Posted By: swiggles

Re: Are pre-qualifications HMDA reportable? - 01/16/15 09:05 PM

Pre-qualification requests are not reportable.
Posted By: solbrillante

Re: Are pre-qualifications HMDA reportable? - 01/16/15 09:09 PM

I have a someone who disagrees with me. And since my only source is a 1996 guide, not much to stand on. The Getting It Right guide and the reg don't say much about it, other than pre-quals are not reportable.
Posted By: swiggles

Re: Are pre-qualifications HMDA reportable? - 01/16/15 09:17 PM

The FFIEC's "HMDA Getting it Right" states not to report pre-qualification requests. See page 9

Transactions Not to Be Reported (bullet 8) "Prequalification requests for mortgage loans, as opposed to preapproval requests, which must be reported See comment 1003.2 (Application)-2"

Just remember....if an application bears an address, it can't be a pre-qual or a pre-approval. It's an application.
Posted By: raitchjay

Re: Are pre-qualifications HMDA reportable? - 01/16/15 09:51 PM

Originally Posted By: solbrillante
The Getting It Right guide and the reg don't say much about it, other than pre-quals are not reportable.


Truly not trying to be sarcastic at all, just trying to understand: what else do you need or want it to say?
Posted By: Princess Romeo

Re: Are pre-qualifications HMDA reportable? - 01/16/15 11:30 PM

Originally Posted By: solbrillante
I have a someone who disagrees with me. And since my only source is a 1996 guide, not much to stand on. The Getting It Right guide and the reg don't say much about it, other than pre-quals are not reportable.


I'm sorry, but how can the 1996 Guide be your only source?

Here is the FFIEC page with link to the PDF file of 2013 Guide right near the top:
http://www.ffiec.gov/hmda/guide.htm

See pages 9, 12, and D-2, which by the way has a very extensive discourse on Pre-Qualifications and Pre-Approvals:

Quote:
2.
Prequalification. 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 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 HMDA/ LAR, even though these requests may constitute applications under Regulation B for purposes of adverse action notices.


Quote:
3.
Requests for preapproval. To be a covered preapproval program, the written commitment issued under the program must result from a full 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. In addition to conditions involving the identification of a suitable property and verification that no material change has occurred in the applicant’s financial con dition or creditworthiness, the written commitment may be subject only to other conditions (unrelated to the financial condition or creditworthiness of the applicant) that the lender ordinarily attaches to a traditional home mortgage application approval. These conditions are limited to conditions such as requiring an acceptable title insurance binder or a certificate indicating clear termite inspection, and, in the case where the applicant plans to use the proceeds from the sale of the applicant’s present home to purchase a new home, a settlement statement showing adequate proceeds from the sale of the present home.
Posted By: solbrillante

Re: Are pre-qualifications HMDA reportable? - 01/17/15 01:13 PM

I think her issue is not the fact that pre-qualifications are not HMDA reportable, but that the particular samples I have are not pre-qualifications. These applications don't have a property listed and some of them don't even have a loan amount. In some of them we don't have a full underwriting either. So I am trying to argue with this person that the applications on hand are pre-qualifications.

Thanks for everyone for your input.
Posted By: Kathleen O. Blanchard

Re: Are pre-qualifications HMDA reportable? - 01/17/15 04:31 PM

There should not be a property for a preapproval or prequalification, and the applicant needn't specify an amount. The bank is going to tell them what they qualify for. A preapproval must be fully underwritten for credit; the approval is subject only to an acceptable property and relatec property conditions.
Posted By: JWills, CRCM

Re: Are pre-qualifications HMDA reportable? - 02/02/15 05:53 PM

I have an application that started as a pre-approval, (customer requested), found a home, started loan process, appraisal came in too low so turned into a denied application. Would I still report as a pre-approval now that I have a property identified?
Posted By: swiggles

Re: Are pre-qualifications HMDA reportable? - 02/02/15 05:54 PM

No. Once an address is idenitified, it can no longer be a pre-approval request.
Posted By: Kathleen O. Blanchard

Re: Are pre-qualifications HMDA reportable? - 02/02/15 06:05 PM

But for the preapproval code itself you will report that a preapproval was requested. Your denial is a regular loan denial, not a denied preapproval request.
Posted By: JWills, CRCM

Re: Are pre-qualifications HMDA reportable? - 02/02/15 06:05 PM

Ok, so on my HMDA LAR, I would report as preapproval requested (1) and then action take would be denial (3) not a (7) correct?
Posted By: Kathleen O. Blanchard

Re: Are pre-qualifications HMDA reportable? - 02/02/15 06:11 PM

Yes.
Posted By: JWills, CRCM

Re: Are pre-qualifications HMDA reportable? - 02/02/15 06:12 PM

Thanks!
Posted By: swiggles

Re: Are pre-qualifications HMDA reportable? - 02/02/15 06:45 PM

Duh....I didn't reason that one out before answering. I really WAS thinking it would NOT be reported as a request for pre-approval. It's been so long since I've had any dealings with pre-approval requests, guess I had a brain [censored]. I haven't been at a bank than had or has a pre-approval program since 2009.
Posted By: Kathleen O. Blanchard

Re: Are pre-qualifications HMDA reportable? - 02/02/15 10:52 PM

I thought you answered the denial part (correctly)! My intent was to clarify the preap code itself!
Posted By: swiggles

Re: Are pre-qualifications HMDA reportable? - 02/02/15 11:17 PM

Nope....my brain got sideways and I thought I was answering that as well. Happy Monday.
Posted By: Donnie

Re: Are pre-qualifications HMDA reportable? - 09/03/21 03:26 PM

Ms. Blanchard, this thread is old so I want to ask you if you think the language "conducts a comprehensive analysis of the applicant's credit worthiness (including income verification) is no longer the litmus test. Meaning does the analysis have to include income verification? If we haven't yet verified income, but we have pulled credit and we have performed an analysis as to the request and looked at DTI, length of empl, etc., would this be considered a comprehensive analysis and change a prequalification to a preapproval?
Posted By: Dan Persfull

Re: Are pre-qualifications HMDA reportable? - 09/03/21 07:00 PM

You either have a pre-approval program or you do not (1003.2(b)(2)). An ad-hoc preapproval would not be a preapproval for HMDA reporting purposes.

2021 GIR page I-32

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).
Posted By: Donnie

Re: Are pre-qualifications HMDA reportable? - 09/03/21 08:45 PM

Thanks Dan. As always a great help! ;>)
Posted By: Rocky P

Re: Are pre-qualifications HMDA reportable? - 09/04/21 01:54 PM

Donnie, thinking of the 5 C's of credit
Character - the intent to repay - credit score
Capacity - the ability to repay - DTI
Capital - the down payment - LTV (equity)
Conditions - term of the loan,rate, ARM, # years etc.
Collateral - actual property.

A pre-approval program covers the first 4 C's. The lender nails it shut. The ONLY thing left is for the applicant to find collateral. Since the first 4 are already done, the borrower is pre-approved subject to acceptable collateral, nothing more.