LE Requirements for Online Applications Not Submitted
Adam uses this Compliance Clip (video) to discuss what to do in situations where applications containing the six pieces of information (constituting an application under TRID) are located on an online application system, but the borrower never hits the “submit” button, so a Loan Estimate doesn’t go out to the applicant within 3 days of collecting this information (if ever). In other words, Adam answers the question of whether collecting the six pieces of information in an online application where the borrower doesn’t submit the application constitutes a received application under TRID, requiring an LE?
This topic is actually one of five TRID questions answered in our 3Q 2019 Quarterly Compliance Update. For more information on this program, click here.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to discuss whether a Loan Estimate is required for an online application where six pieces of information have been collected, but the application has not been submitted. So the question we have at hand is something I've received several times over the last few years. The question is, “Is a Loan Estimate required if an applicant starts an online application, provides a six pieces of information that would normally constitute an application under the definition of TRID, but the applicant does not submit the application through the online system?”
Again, this is a question I've received several times because what happens inevitably is a compliance officer or auditor is reviewing different things, looking at different angles, and discovers an online application system that's holding pending applications that have received six pieces of information but have never been submitted and therefore no Loan Estimate has been provided. And typically when this question comes, the compliance officer or auditor is somewhat frantic to determine if they have a major issue because the six pieces of information have been collected, is there a violation because the Loan Estimate has not been provided. So this is the question that we have at hand.
The answer of course is going to come from the TRID final rule, which is the 2013 final rule of TRID, or it can also come from the CFPB frequently asked questions that were recently released relating to the Loan Estimate, because these two things basically say the same. So let's look at the most recent one, which is the new CFPB TRID frequently asked questions regarding the Loan Estimate. In this, the CFPB gives us a pretty clear answer. What they say here is, “..if a consumer starts filling out a form online, enters the six pieces of information that constitute an application for purposes of the TRID rule, but then saves the form to complete it at a later time, the consumer has not submitted the six pieces of information that constitute an application for purposes of the TRID rule.” And of course, the key to this is “submit.” The applicant must submit those six pieces of information for it to be considered an application that triggers a Loan Estimate.
So if your online system collects the six pieces of information but does not deliver those to you because the applicant has not submitted those, then you do not have a completed application under TRID and do not have to provide the Loan Estimate. So for some of you, that may be a big “woo!” since you may have thought that this was a requirement. Fortunately, the preamble to the original TRID rule said this and the new frequently asked questions also say that as well. So that is what the requirement is and that is why the software providers allow the six pieces of information to be collected but not submitted.
Hopefully that answers a question for you. And that's all I have for you today in this Compliance Clip.