TILA-RESPA INTEGRATED DISCLOSURE RULE FREQUENTLY …

1 PRMG TRID Wholesale FAQ Page 1 of 16 Rev. 10/22/2015 TILA-RESPA INTEGRATED DISCLOSURE RULE FREQUENTLY asked QUESTIONS (Wholesale Version) Effective Date of the TILA-RESPA INTEGRATED DISCLOSURE rules (TRID) Q: When will the new DISCLOSURE rules under TRID take effect? A: The new rules will go into effect for all applications taken by the originator on or after October 3rd, 2015. Q: What happens if prior to October 3rd, 2015, we have taken an application for a pre-approval/pre-qualification and the borrower has not found a property yet, but on or after October 3rd, 2015 we obtain a property address, should we apply the new TRID disclosures ?

2 A: If prior to October 3rd, 2015 you did not have a property address or all six pieces of information that constitute an application under TRID, then you did not have an application prior to October 3rd 2015. If you receive that last piece of information on October 3rd, 2015 or later, then your application date will be the date you received that last piece of information constituting an application. Since you would have received that last piece of information and ultimately an application as defined under TRID on or after October 3rd, 2015, the new TRID rules and disclosures will apply. Early DISCLOSURE Requirements/Application Information Q: When must an applicant be provided a Loan Estimate (LE)?

3 A: An applicant must be provided a LE within three general business days of when the originator has taken an application as defined under TRID. Q: When does a creditor or broker have an application for the purposes of having to deliver the Loan Estimate? A: An application is considered taken when the broker s or creditor s originator receives the following six pieces of information: (1) name(s); (2) social security number; (3) income; (4) the subject property address; (5) the estimated value of subject property; and (6) the loan amount sought. PRMG TRID Wholesale FAQ Page 2 of 16 Rev. 10/22/2015 Q: Can the application information be received verbally, or is documentation required for any of the six items?

4 A: The six pieces of information can be taken verbally ( , in an-person or telephone interview) or in writing from the borrower. We cannot hold back on issuing the LE pending documentation of any of those six items. Q: What if an applicant submits an application via the originator s website and when it is finally reviewed, the applicant does not qualify. Do you still need to send an LE? A: Broker must ensure that they are following proper HMDA and Fair Lending procedures prior to issuing a denial. If a loan is denied or withdrawn within three general business days of receiving the application, the rule states that there is no need to issue an LE; however, should the consumer later change their minds or provide additional qualifying information, that application cannot be re-opened; you would need to take a new one.

5 Q: If two applicants share the same email address, can we issue the required disclosures to each borrower utilizing the same address? A: PRMG will accept this as long as the disclosures are being sent to the requested address by each respective applicant that must be delivered a DISCLOSURE under the rule (LE or CD). Q: Who must be provided an LE? A: At a minimum, the primary borrower/applicant must be provided the LE under TRID; however, it is a better business practice to provide all borrowers on the loan a copy of the LE. PRMG encourages all clients to follow best business practices. Q: What is the final determination of who is the primary borrower?

6 A: As a general qualifying determination, usually, the primary borrower will be named first on the transaction. If a primary borrower is not apparent, then the LEs and CDs should be provided to each borrower. Q: What happens if the applicant does not sign the disclosures (including the LE) or the application within three general business days of when the originator has taken the application? A: The rule does not impose any requirements upon when the borrower must sign the initial LE. The rule only states that a broker or lender must provide an LE within three general business days of receiving an application. PRMG TRID Wholesale FAQ Page 3 of 16 Rev.

7 10/22/2015 Q: How do we prequalify a refinance without triggering TRID? A: You likely will have all six pieces of application information in the prequalifying process on a refinance, because you will need everything other than the property address, but you will have address, anyway. If you are unable to complete the prequalification in three business days, you will need to send the initial LE before you finish. If you send the initial LE on the loan amount requested, and later find that the consumer will not qualify on that basis, you will need to issue a revised LE under a changed circumstance if the consumer still wishes to move forward with the application.

8 An LE is not a commitment to lend; it is a tool for the consumer to use in shopping mortgage for loan products. Q: Can you require a borrower to provide you supporting documentation of their income, such as W2 s? A: You can require a consumer to provide you supporting documentation as a part of the standard loan process but you CANNOT delay the initial Loan Estimate delivery requirement because the consumer has not yet provided you the supporting documentation. If the consumer provides you their income, you must reasonably rely upon that amount and disclose within three general business days of when the loan originator receives the remaining five items of an application from the consumer.

9 If at a later time, the consumer provides you documentation that cannot support the stated income they provided you, then you will have a valid change of circumstance allowing you to redisclose the change in settlement fees resulting from the new/incorrect information. Q: How early can we order an appraisal or charge the borrower for upfront fees? A: With the LE going out earlier in the process and the fact that there is no longer a need to wait on a Wholesale transaction for a lender to issue a TIL and the consumer to receive that TIL, the waiting time to order an appraisal should be minimized in comparison to the old rules . To order an appraisal, PRMG will require that: (1) the broker disclosed an LE to the consumer, (2) the consumer has received the LE (relying on the mailbox rule presumption or other valid proof of receipt), (3) the consumer has indicated an intent to proceed with the transaction, (4) the loan has been submitted to PRMG with the minimum submission requirements, and (5) PRMG has accepted the loan and the broker s initial LE.

10 As soon as those five items have been satisfied, the broker may order an appraisal. Q: Can I charge the applicant for a credit report before issuing an LE? A: Yes, the rule explicitly allows for an originator to charge the applicant for a credit report and only a credit report prior to the applicant receiving the LE and indicating an intent to proceed. No other fees may be imposed upon the applicant prior to the applicant receiving an LE and indicating an intent to proceed. Imposing a fee includes collecting the applicant s credit card information ahead of time with the anticipation to charge them for a fee other than the credit report prior to them receiving an LE and indicating an intent to proceed.