Did You Receive A Mortgage Application?

October 5, 2015 at 10:41 am Leave a comment

Saturday, October 3, 2015 was the day the TRID regulations kicked in. The new integrated disclosure requirements apply to all applications received on or after that date. For many of you, nothing I’m going to say in today’s blog is surprising. But I’m going to guess there are some of you who never quite got around to reviewing the regulations as much as you wanted to. So in the coming weeks I am going to periodically review some of the basic concepts behind the regulations and provide you with some guidance as to where to look for answers as you go through the TRID process for the first time.

By the way, the CFPB has done a great job providing implementation material and all of you should be familiar with their site. In implementing the regulation, it’s the CFPB’s hope that combining and simplifying  the initial disclosures  will lead to a better informed home buyer. The Loan Estimate is replacing the erstwhile GFE and Early Truth in Lending disclosure.

One of the most important changes made by the CFPB was to redefine what an application is so that creditors have less flexibility in determining when disclosures have to be provided. In the old days, like last Friday, an application was received when you had “the borrower’s name, the borrower’s monthly income, the borrower’s social security number to obtain a credit report, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any other information deemed necessary by the loan originator.” An application could be either in writing or electronically submitted, including a written record of an oral application.

As of Saturday, an application is received anytime you receive the name, the borrower’s monthly income, the borrower’s social security number to obtain a credit report, the property address, an estimate of the value of the property, and the mortgage loan amount sought. As a result, an application is now received regardless of whether or not you have traditionally  required additional information for an application to be complete. Again, this makes perfect sense if your goal is to get information in the hands of consumers as quickly as possible.

But lets’ say your credit union has never started the mortgage process without obtaining eight pieces of information. The CFPB gives you some flexibility if you know how to take advantage of it. First, you are allowed to request more than the six pieces of information that trigger the early disclosure requirements so long as you provide the Loan Estimate when you get the six pieces of information regardless of how much information you will use in underwriting the loan.

Sequence is also important. You could receive 14 pieces of information from a member; but, if that information does not include the 6 magic factoids then an application has not yet been received and your credit union does not yet have to provide an Early Disclosure.

The elimination of the “any other information” catchall makes the second part of the definition more important. Remember that an application includes a written record of an oral application. This means that your originator having a casual conversation with a potential first time home buyer just curious about the housing market may have taken an application and not even know it. This is a great example of why you need to have updated procedures in place.

Now, let’s say you have received an application.  A creditor is responsible for delivering the Loan Estimate or placing it in the mail no later than the third business day after receiving the application. (1026.19(e)(1)(iii)). Were you open on Saturday? For purposes of complying with this rule, a “business day” means a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. See § 1026.2(a)(6). In other words, if you are not open for business on the weekends, the clock doesn’t start to run. It also  means, as explained by the commentary, that if an application is received on Monday, the creditor satisfies this requirement by either hand delivering the disclosures on or before Thursday, or placing them in the mail on or before Thursday, assuming each weekday is a business day.

You can use email so long as the member has consented to receive the disclosure electronically and you receive an acknowledgement that the email was received.

Employment Numbers Disappoint…Big Time

The employment numbers Friday were like the Yankees performance over the last seven games of the season: lousy. Once again the Fed finds itself in the unenviable position of deciding if the economy is ready for an interest rate rise or too weak to withstand the shock. On Friday, the DOL reported Total nonfarm payroll employment increased by 142,000 in September, and the unemployment rate was unchanged at 5.1 percent. Are the numbers scary enough for the Fed to push back an increase? My guess is no but it makes next month’s numbers that much more important.





Entry filed under: Compliance. Tags: , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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