I'm new to HMDA and looking for guidance.
We are working on creating procedures for “prequalification” loan requests. Often times a customer will come to a lender looking to purchase a house, but they don’t have a property picked out yet. We do not have a formal preapproval program, so they are legit pre-quals. The issue we’re having is that oftentimes these “leads” sit out there for way too long. Either because they can’t find a house, or they’re not ready to bite the bullet yet and purchase, but they want to keep the application open.

We worked out the Reg. B side and determined when we need to send a Notice of Incompleteness. The part that is throwing me off is whether we need to report these for HMDA if we do send a NOI.

Thinking out loud…
1. Prequalification's are NOT HMDA reportable (unless we deny it, then prequals are reportable)
2. We do not have a completed application when we do a pre-qual.
3. HMDA action taken codes say that if we send an NOI, we have to report it as Closed for Incompleteness or Application Denied

SO…. Do we say we don’t have a HMDA application, by our definition and not report the pre-qual, OR do we report is as Closed for Incompleteness or Application Denied?

A prequal is usually based on stated income and a credit report. Why would you not be getting at least that information? Pre-qual applications should be able to be dispatched rapidly, they should not be "hanging around". You tell them how much they qualify for (with the traditional conditions) or you deny them.

Often times a buyer hasn't found the right house and when they do, we want to be there for them. That's why they would be "hanging" around.

You get a pre-qual application. You tell them what they can qualify for, or you deny them. That application is then closed. The application does not hang around. If the borrower finds a home, then they will come back and submit an actual loan application. While you may have a list of previously approved pre-quals and your loan officers might have some sort of process of keeping in touch with them regarding their progress in finding a house, that has nothing to do with the pre-qual application that was already dispositioned. That pre-qual application does not "hang around". It is over.

Denied prequals aren't HMDA reportable either, as you (the OP) stated in your original post.

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 loan 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 loan/application register, even though these requests may constitute applications under Regulation B for purposes of adverse action notices.

You also probably shouldn't need an NOI on a prequal. What are you asking them for? If you don't have enough information to do a prequal, I'm not sure you've hit a Reg B application that would require an NOI.