A lender takes 4 applications in a month: a home purchase that closes, a refinance the borrower withdraws, a home improvement loan it denies, and a pre-qualification request that goes no further. Assuming the lender is HMDA-covered and each of the first three requests is for a covered loan, which requests belong on the loan/application register?
Correct Answer
B) The first 3 are reportable; a pre-qualification request is not an application
B. Report the first three, not the pure prequalification request. HMDA reporting includes covered applications that do not close; origination, denial and withdrawal are different action outcomes. A prequalification request is excluded from Regulation C’s application definition, even though Regulation B may treat it differently. Scope and exceptions: A qualifying preapproval program is different from prequalification. Classify the actual process, not merely the lender’s label. The stem already establishes coverage of the first three requests. Source: 1003.2(b); comments 2(b)-1–3 — https://www.consumerfinance.gov/rules-policy/regulations/1003/2/ 1003.4(a)(8)(i) — https://www.consumerfinance.gov/rules-policy/regulations/1003/4/
Why This Is the Correct Answer
B. Report the first three, not the pure prequalification request. HMDA reporting includes covered applications that do not close; origination, denial and withdrawal are different action outcomes. A prequalification request is excluded from Regulation C’s application definition, even though Regulation B may treat it differently. Scope and exceptions: A qualifying preapproval program is different from prequalification. Classify the actual process, not merely the lender’s label. The stem already establishes coverage of the first three requests.
Why the Other Options Are Wrong
Option A: All 4 are reportable, because each records a consumer approaching a lender
It incorrectly includes the pure prequalification.
Option C: The first 2 are reportable; a denial is recorded separately from the register
Denials are not removed from the loan/application register.
Option D: Only the 1 that closed is reportable, since the others produced no loan
Reporting is not limited to funded loans.
Exam Tip
First determine coverage; then report the appropriate action outcome.
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