In life we always have changes, it's planning , planning and still more planning - the world didn't stop 12/31/1999 at 11:59 pm. Will there be a learning curve for real estate agents, builders , lenders and mortgage professionals - 100%! There's always a way of finding how to keep business moving - great ones are already doing so - PreApprovals are still part of the business.
FROM Origination News
The
TRID Loophole the CPFB Says Is Legit
by Ari Karen
MAY 28, 2015
Anyone who's closely read the
nearly 1,900-page final rule for the TILA-RESPA Integrated Disclosures likely
noticed a nifty loophole when it comes to how lenders can issue mortgage
pre-approvals.
For everyone else, the
Consumer Financial Protection Bureau recently clarified how a loan pre-approval
doesn't automatically trigger TRID's three-day window for delivering initial
disclosures.
The workaround was mentioned during
a webinar hosted by the CFPB and Federal Reserve Board that also addressed new
rules that prohibit lenders from requiring a borrower to provide verifying
documentation prior to providing the Loan Estimate.
The CFPB first pointed out
that TRID only prevented lenders from "requiring" such information,
but that if voluntarily provided by the borrower it was permissible. Of course,
the agency immediately followed up by explaining that a lender that explicitly
or implicitly requires such documentation would be violating the law.
This obviously creates risks
for lenders who expect to rely upon the borrowers' "voluntariness,"
since a borrowers' subjective belief they implicitly had to provide
documentation could create risks for a lender.
However, it is only after all
six pieces of information are collected that the requirement of a Loan Estimate
is triggered. The CFPB also indicated that as long as a lender did not collect
the six pieces of information necessary to trigger the Loan Estimate, a lender
could obtain verifying documentation.
"The bureau does not
believe that the definition of application will restrict creditors' ability to
provide prequalification cost estimates or grant pre-approvals, because
creditors could provide prequalification estimates and grant pre-approvals
without obtaining all of the six elements of information that make up the
definition of application," Pedro De Oliveira, counsel at the Consumer
Financial Protection Bureau, said during the webinar.
Hence, as long as the lender
does not, for instance, obtain the subject property address, the lender has no
obligation to provide the disclosures and/or Loan Estimate.
Accordingly, those lenders
that wish to provide pre-approvals may be well advised to consider making
pre-approvals general, as opposed to specific to a designated property.
Ari Karen is an attorney at Offit Kurman.
