Why are you pulling credit reports immediately? If you don't believe they have submitted an application, you don't have a legitimate business need to do so. I think this practice not only creates lots of questions, such as you've asked, but also creates other legal and regulatory issues.
If you have enough information to make a decision, you have an application [refer to Section 202.2(f) and its commentary]. Imagine the credit report is bad enough that you wouldn't make the loan no matter what else is submitted. This is enough info to say "no"; therefore, it is an application and an AAN is triggered. If this is the case:
- This would be HMDA reportable (if HMDA is applicable).
- You would need to deny before three days so you don't trigger a P-TIL disclosure.
- You deny the request. The customer has no further action necessary.
- You would be denying it - not closing it for incompletion.
Let's assume the credit report is good, but you don't have enough information to make a decision. You may not have a completed application, but you may have an application for TIL and RESPA. This is difficult to answer, as it would depend on many other variables.
I highly recommend you visit the right to pull a credit report at this stage of the process. I also recommend that you and your lenders receive application training.
First published on BankersOnline.com 2/08/10