As a lender, how do I collect the information I need to provide an accurate Loan Estimate (“LE”) (which replaces the initial Truth in Lending (“TIL”) disclosure and Good Faith Estimate (“GFE”)) under the new definition of “application”?

Implementing the TRID rule is as much about improving the way you and your systems manage information as it is about providing the new forms. This is because the TRID rule uses the existing mortgage disclosure framework you are familiar with, but enhances and tightens those requirements so that compliance can only be achieved if you have the ability to collect, track, and analyze the information you receive during the origination process. That begins with determining when you have received an “application.”

As is the case today with the GFE and initial TIL disclosure, you must provide the LE no more than three business days after you receive an “application.”[1] Unlike the current rules, however, you will no longer have the right to gather all the information you need before providing an estimate.

Instead, under the TRID rule, you will generally be considered to have received an “application” – and the three-business day clock will start running – once the consumer has submitted these six pieces of information for the purpose of obtaining an extension of credit:

  1. The consumer’s name;
  2. The consumer’s income;
  3. The consumer’s social security number to obtain a credit report;
  4. The property address;
  5. An estimate of the value of the property; and
  6. The mortgage loan amount sought.[2]

Although the Bureau has said that you may attempt to sequence the collection of information so that you receive everything you need to provide an LE before the submission of the last of the six items, Bureau staff has also advised that you cannot refuse to accept any of the six items.[3]

This means that you must be able to track and document what information you have received and when you received it. Furthermore, if you work with brokers, you must also be able to document what information the broker received and when the broker received it because you retain responsibility and liability for providing a compliant LE.[4] Accordingly, you may want to ensure that you have sufficient time during the three day period to review any LE the broker prepares before the broker provides it to the consumer.

[1] 12 C.F.R. § 1026.19(e)(1)(iii).

[2] 12 C.F.R. § 1026.2(a)(3)(ii).

[3] Cmt. 2(a)(3)-1; BuckleySandler Unofficial Transcript of Aug. 26, 2014 CFPB Webinar (“Transcript”) at 11, available at http://www.buckleysandler.com/uploads/1082/doc/TILA-RESPA_Integrated_Disclosures_8-26-2014_Transcription.pdf (stating that “the Bureau has never endorsed refusal of any of the six elements by a creditor because it would like additional information”).

[4] 12 C.F.R. § 1026.19(e)(1)(ii); cmt. 19(e)(1)(ii)-2.

Answered By: Ben Olson