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#1634788 - 12/02/11 05:30 PM Intent to Proceed
Liz Y Offline
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Tennessee
We just had our friendly auditors come and we have been informed that our loan files need to include another disclosure that the customer "intends to proceed". It is our practice not to charge any closing costs until the closing date and so we don't use any special disclosure. Not to mention that our software doesn't provide any such form. Have you had exams where this was an issue? Is there a regulation that says we should have been using this disclsoure all along?
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Lending Compliance
#1634793 - 12/02/11 05:40 PM Re: Intent to Proceed Liz Y
rlcarey Offline
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Galveston, TX
We just had our friendly auditors come and we have been informed that our loan files need to include another disclosure that the customer "intends to proceed".

Tell them to show you where in the regulation this form is required. It is not.
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#1634801 - 12/02/11 05:47 PM Re: Intent to Proceed rlcarey
Kathleen O. Blanchard Offline

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As Randy said, it is not a requirement. You need to at least speak to them and determine that they intend to proceed but there is no form. Some banks have developed an internal form but it is not legally required.
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#1634814 - 12/02/11 05:57 PM Re: Intent to Proceed Kathleen O. Blanchard
RulesFollower Offline
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The regulation does require you document the customer has expressed his intent to proceed but does not require a special disclosure. As acknowledgement of the GFE is not enough to document intent, we have added verbiage to our cover letter stating that the customer understands that signing and returning is their intent to proceed with the loan.

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#1634816 - 12/02/11 05:58 PM Re: Intent to Proceed Kathleen O. Blanchard
Combustible Offline
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But wait, if the bank's policy is to have a procedure in place to prove intent to proceed, and the policy is not adhered to, there is a policy violation, which could lead to criticism from examiners, correct?

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#1634817 - 12/02/11 05:59 PM Re: Intent to Proceed Combustible
Kathleen O. Blanchard Offline

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Yes. You have to follow your own procedures.
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#1634883 - 12/02/11 07:11 PM Re: Intent to Proceed Kathleen O. Blanchard
Liz Y Offline
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Joined: Aug 2011
Posts: 10
Tennessee
I found this in the reg:(4) Expiration of original GFE. If a borrower does not express an intent to continue with an application within 10 business days after the GFE is provided, or such longer time specified by the loan originator pursuant to
paragraph (c) above, the loan originator is no longer bound by the GFE.
Is there more that I am missing? I am not seeing that it has to be documented either.???
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#1634892 - 12/02/11 07:15 PM Re: Intent to Proceed Liz Y
rlcarey Offline
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The only real issue is if you are charging them fees upfront. You can't charge (except for the credit report) until an intent to proceed is received. Other than that, I see no reason to actually have to document this process.
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#1634912 - 12/02/11 07:29 PM Re: Intent to Proceed rlcarey
Liz Y Offline
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Joined: Aug 2011
Posts: 10
Tennessee
Thank you! smile
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#1634963 - 12/02/11 08:16 PM Re: Intent to Proceed Liz Y
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rl is correct, you can not charge any upfront fees BUT another thing you can't do is request income documentation and at our bank we don't order the appraisal without the consent either.

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#1634966 - 12/02/11 08:22 PM Re: Intent to Proceed RulesFollower
Truffle Royale Offline

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Auditors or examiners?
Auditors like to come up with all kinds of 'recommendations'.
As has been stated above, there is no regulatory requirement for documentation by a certain form.
It is prudent to have some kind of procedure, be it a form or a line on your processing sheet, that notes when and how the intent to proceed was expressed by the borrowers.

Whether you charge fees up front or at closing is immaterial.
I can vouch that EXAMINERS will ask when you got the OTP or ordered the appraisal, neither one of which, by Regulation, can occur till after you have delivered the GFE&TIL and received the intent to proceed.

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#1634969 - 12/02/11 08:23 PM Re: Intent to Proceed Truffle Royale
rlcarey Offline
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Galveston, TX
BUT another thing you can't do is request income documentation

You can "request" verification documentation any time after you deliver the GFE - intent to proceed or not.
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#1634986 - 12/02/11 08:37 PM Re: Intent to Proceed rlcarey
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Why would you request anything from a customer that has not agreed to do business with you?

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#1635013 - 12/02/11 09:05 PM Re: Intent to Proceed RulesFollower
rlcarey Offline
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Galveston, TX
I don't know, but my point was that there was no prohibition on making the request after the GFE is delivered whether they have an intent to proceed or not.
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