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A buyer asks an MLO for a 'pre-approval letter' to make an offer. The MLO has only had a phone conversation about her income and has not pulled credit or seen documents. What can he accurately provide?
A pre-qualification is an informal estimate of what a borrower may qualify for, based on information she reports. A pre-approval generally means the lender has reviewed credit and verified key information and issued a conditional commitment. Calling an unverified estimate a 'pre-approval' misleads the buyer and the seller, which can be a deceptive practice (12 U.S.C. 5531; Model State Law prohibited acts). Source: 12 U.S.C. 5531 (UDAAP); CSBS/AARMR Model State Law, prohibited acts (as at 11 Oct 2026).
Issuing a 'pre-approval' without pulling credit or verifying anything.
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