Answer:
from Randy: "Would you agree with this determination?"
No. Defining an application has to be based on information given to you by the applicant and not whether or not the bank takes a specific action such as pulling a credit report.
Answer:
from Andy: A key issue is what information did you obtain from the applicant, how did you respond to questions of theirs and did you make a credit decision. I'm not talking about prequal programs, but the differences when you have that person in front of you. This FRB publication can help as will the FDIC's Mortgage Loan Prequalifications: Applications or Not? booklet.