VIDEO: TRID Application
In this Compliance Clip (video), Adam talks about the six pieces of information r needed for a TRID application under Regulation Z. Adam discusses what constitutes a completed application and when the six pieces of information triggers the loan estimate requirements.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about the six pieces of information required for an application under TRID. We're looking at Regulation Z. Now, the question we have here is what is considered a completed application under TRID, which, of course, would be the trigger and requirement for a loan estimate? In other words, what triggers a loan estimate?
Well, the answer to this, of course, comes from Regulation Z Part 1026.2(3), as well as the CFPB's TRID Frequently Asked Questions. Now, under TRID and Regulation Z, an application includes six key pieces of information. And when we receive these six key pieces of information, this constitutes, by definition, an application and therefore triggers the requirement for a loan estimate.
The six pieces of information include, number one - the consumer's name, number two, - the consumer's income, number three - the consumer's social security number in order to obtain a credit report, number four - the property address, number five - an estimate of the value of the property, and then number six, - the mortgage loan amount sought. So, these six pieces of information constitute an application by definition under TRID. And when you have an application under that definition of Regulation Z, you are then required to provide a loan estimate.
These six pieces of information start your clock for when you must require and deliver a loan estimate to your customer. So, if you don't have all of these pieces of information, your clock doesn't begin. But once you have them, your clock does begin. So that's how this works.
Now, there's a couple of things that are included in the Frequently Asked Question that really came to us in the Summer of 2019. What the CFPB has told us is that 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 the application. In addition, one question that I've seen come up several times over the years is what if the information is actually entered on our online application system? So the lender has the information on the system, but the customer never hit apply. So it's kind of in their login, but it never got sent to us. Do we need to be checking to make sure that we don't have six pieces of information? Is that a trigger for us, or how does that work?
The Frequently Asked Question expanded the guidance and told us this from the CFPB. The CFPB said that if the consumer starts an online application and enters all six pieces of information, it only becomes an application when they actually submit the application. So, if they put all six pieces of information on the online system but they don't submit it for two weeks, it only becomes an application when they hit that submit button and the information is delivered to you. The CFPB has clarified that and the TRID Frequently Asked Questions on their website.
In addition, Regulation Z is very clear that creditors cannot require more than six pieces of information before providing a loan estimate. Prior to the recent TRID rules, it used to be that we could require anything else that we wanted to, under the definition of an application. However, that's been revised down to six pieces of clearly defined information. And what that means is you're not allowed to require anything. Once you have these six pieces of information, you're required to provide a loan estimate because you have an application by definition under Regulation Z.
And finally, the regulators tell us that a pre-approval does not require a loan estimate if all six pieces of information are not submitted. For example, if somebody's doing a pre-approval to figure out how much they qualify for a home, then they're going to go shopping for a home in the market such that they have no idea what home they're going to get, so they don't have a property address. That is not six pieces of information. They don't have a property address, therefore that's a true pre-approval, because a pre-approval is to see what you qualify for in order to go shopping, and so that would not trigger a loan estimate because you don't have an application by definition. However, if they know that they're going to refinance their home, that is not a pre-approval. They have a clear address. When you have a clear address, that is a clear piece of information. If you have all other five pieces of information, that's a completed application. And that, of course, would trigger the loan estimate requirements because you have an application under the definition of Regulation Z.
That's it for this Compliance Clip. That's a little bit about Regulation Z and the six pieces of information.