VIDEO: TRID 6 Pieces of Information
In this Compliance Clip (video), Adam discusses the 6 pieces of information required for an application under TRID. He explains a few nuances related to this as well as a few things to watch out for.
Video Transcript
The following is a transcript of this video:
This Compliance Clip is going to talk about the six pieces of information under TRID or the Truth in Lending and RESPA Integrated Disclosure requirements under Regulation Z. Specifically, we have this question here. The question says “What is considered a completed application under TRID, which requires a Loan Estimate?”
What we're talking about here is an application under TRID because the definition of an application is there. The answer here is going to come from the definition section of Regulation Z, which is 1026.2(3) and the CFPB’s TRID Frequently Asked Questions. Now I bring this up because I once met a loan officer who was trained incorrectly, that they did not have to provide a loan estimate until they pulled credit on a customer when they received an application. What was happening is they were receiving applications that had these six pieces of information on it, but they were waiting to pull credit until, to a time that was convenient to them, pulled credit, and then started the clock in order to issue the Loan Estimate. As you know, once you’ve received an application under TRID, you only have three days to provide that Loan Estimate.
Let's talk about those six pieces of information because the credit report is not one of those six pieces and the credit report is not the trigger. What is the trigger is receiving six pieces of information. Those include, number one, the consumer's name, the consumer's income, the consumer's social security number in order to obtain a credit report. So once you have the social security number, that is the triggering piece of information on this bullet point. It's not pulling the credit report, it's obtaining the social security number so that you can obtain a credit report. Also, included in the six pieces of information is the property address and an estimate of the value of the property and the mortgage loan amount sought. These are the six pieces of information. When you receive these six pieces of information, this starts your clock for providing a Loan Estimate. This is considered an application under Regulation Z for mortgage loans, subject to TRID. So this is important to understand, it’s nothing else, it's these six pieces of information.
There's a few things that we can talk about to clarify this. First of all, having the six pieces of information from a prior loan is not an application unless the consumer indicates the information should be used as part of their application. So if they say, “Oh, you have that on file, you can use it.” then you would consider that information. But just because you had a prior loan doesn’t mean that you have the six pieces of information from the applicant.
Also, if the consumer starts an online application and enters all six pieces of information into the system, it's only going to become an application when they actually submit the application. So if they enter the information into the system and save it to come back to it later, if they never hit submit and provide that application through that entire process, that's not considered an application for TRID purposes. That is clarified under the CFPB’s Frequently Asked Questions about TRID.
Also, creditors cannot require more than six pieces of information before providing the Loan Estimate. So maybe you're requiring nine things or 20 things, and they only provide you nine. But in those nine, they've given you all six items that we listed on the last slide. Well, in that case, you would have an application that starts your clock for the Loan Estimate even though you're wanting more things from the consumer.
Also a pre-approval does not require a loan estimate if all six pieces of information are not submitted. Typically on a pre-approval, somebody is shopping for a home. In my opinion, you can't have pre-approvals on refinances, you can only have them on purchases. The whole point of the pre-approval is to see what you qualify for to show a realtor what you're able to purchase and then you go house shopping to buy a home. So if you have a pre-approval, the question oftentimes is, is a loan estimate required because there's actually some tolerance issues that relate to this that we may talk about in another video down the road, but the reality is that if you don't have six pieces of information, you're not required to provide a Loan Estimate. So what item is typically missing, or items are typically missing, from the application when you have a pre-approval? Well, it's usually the property address and then, of course, the value of the property. That is exactly what we are missing. Therefore we're not required to send a Loan Estimate if we don't have all six pieces of information.
Sometimes people come in and say, I want to buy this property and I want to get pre-approved. Well that property’s address and the other items may actually be a complete application. You do have to be careful on pre-approvals to determine whether or not you have an application that requires a Loan Estimate.
That's all I have for you today in this Compliance Clip.