Do we report pre-qualifications for HMDA in 2018?
No, pre-qualifications that are outside the definition of a preapproval are not reportable under HMDA 2018. It is important to note, though, that the bank's definition is not decisive as to classifying the inquiry as a pre-qualification or preapproval. Rather, the CFPB provides definitions that must be used in making the determination.
Generally, a prequalification is defined as "a request (other than a preapproval request) by a prospective loan applicant for a preliminary determination of whether the prospective loan applicant would likely qualify for credit under the Financial Institution’s standards, or for a determination of the amount of credit for which the prospective applicant would likely qualify. The 2015 HMDA Rule does not require a Financial Institution to report prequalification requests, even though these requests may constitute 'applications' under Regulation B."
A preapproval, though, is an application and reportable if it is for a home purchase loan, not secured by a multifamily dwelling, not for an open-end LOC or reverse mortgage, and reviewed under a bank preapproval program. A preapproval program in one in which a bank conducts a comprehensive analysis of the applicant's creditworthiness, resources, etc., and then issues a written commitment with certain limitations. Further, if the bank reviews applications in this manner, but only on an ad hoc basis, it is not considered to have a preapproval program, but must be generally consistent with procedures for these reviews. Finally, preapproval program reviews are only reportable if they resulted in a denial, an offer that was not accepted, or a closure due to application incompleteness. If the review results in a covered loan, then it is reported as a covered loan, not an application.
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