Under the new rules, do brokers have to issue an LE for a specific creditor when they get the application, or can they shop the loan or application around to different creditors?

The rule specifically contemplates that brokers may not know who the creditor is going to be, as long as they’ve made a reasonable effort to determine who the creditor will be. If they don’t know that when they’re making the Loan Estimate, they can issue a blank estimate and then shop it to creditors. There’s flexibility in the rule for doing that. I think where this gets challenging is appetite to actually run with a loan that was made by a broker without a specific creditor in mind. That’s something people in wholesale lending might be skittish about or might not, depending on who the broker is and what your relationships are. And also, of course, secondary market investors—whether they would actually take a loan where a broker made the estimate with a blank name on it and then a creditor later picked it up. Generally, I think if you’re the creditor, the risk you have is that the estimates aren’t any good and you can’t change them. That’s probably your biggest risk. But if you’re willing to live with that, then that’s something you can certainly do.

Answered By: Andy Arculin