The commentary to Reg B says that a request for prequalification is not an application. But it also says that if you deny one, you have treated it as an application and must comply with the notice requirements of 202.9 (adverse action notice). So under those circumstances do you need to retain it for 25 months per 202.12? The record retention requirements of 202.12 only apply to "applications".

Yes. Once you denied the request you treated it as, and it became an application for Reg. B purposes.

That's what I thought, but I was hoping I was wrong. This may be difficult to implement in some lending channels.

Thanks.

A good discussion regarding whether or not you have application can be found here:

http://www.fdic.gov/regulations/compliance/mortgage/preq2.pdf

The information regarding HMDA is outdated, but the information regarding Reg B is still valid.