Today two loan officers from a local bank visited my office. They came in to talk about their loan products and the different loan programs that they have available. They also excitedly showed us their online preapproval application system. A home buyer can go onto their website, fill out the online application form, have their credit run and receive a preapproval letter to print off, as long as credit checks out. We were even told that the entire application is run through the underwriters. They then proudly handed each of us a sample copy of what the preapproval letter would look like, should someone come into the office with it. Here's the catch! The letter states that it is a prequalification, not a preapproval.
One of the other agents in my office asked about the fact that the paperwork states it is a prequalification rather than a preapproval. The answer that was given is that it is a wording glitch, but it is most definitely a preapproval and the potential buyer's credit is run. Here is my question: How can it be a true preapproval letter if the information the customer provides online has not been verified? Yes, their credit is run, but what if the person filling out the application is self-employed? As we all know, the self-employed person's income has a lot of variables. Not to mention, someone may have excellent credit and state that they make more than they actually do, and still get a preapproval based on this exaggerated earning amount. Am I looking too far into this? I would love to get input from all of the wonderful, insightful AR minds!