Q: Are we required to report as a home purchase loan an application based on an oral property address even though the applicant did not provide any documents showing the acceptance of the offer to purchase the home?
A: The primary issue is whether you have an “application,” as defined in §203.2(b). Under this section, an application is an oral or written request for a home purchase, home improvement, or refinancing made in accordance with the procedures used by the institution for the type of credit requested. In general, if the borrower has requested credit in accordance with the bank's application procedures, the institution would likely consider the request as an application. The regulation does not require that an institution obtain an offer and acceptance on a home purchase loan for it to be considered a HMDA-reportable application.
If the application is a prequalification (a request by a prospective applicant for a preliminary determination on whether the applicant would qualify for a loan and for how much), it is not a HMDA-reportable application. If the application is a preapproval request for a home purchase loan, the institution has a covered preapproval program, and the bank approved or denied the request, the application is HMDA reportable. As discussed in §203.2(b)(2), a covered preapproval program has these primary elements:
-The institution reviews home purchase preapproval requests using a comprehensive creditworthiness review;
-Based on this review, it issues a written commitment agreeing to extend a loan up to a specified amount for a designated period of time; and
-The written commitment contains only limited conditions, such as the identification of a suitable property.
Prequalification and preapproval requests that transition to the application stage, such as when the borrower identifies a property, become HMDA-reportable applications if they meet Regulation C's definition of home purchase.