A little but I envision the below regulator argument...

Regulator: Do you require that a customer furnish verification documents prior to receiving a GFE

Me: No

Regulator: What do you require for a Reg B application?

Me: On our form/completely filled out (income, etc, etc) and a paystub.

Regulator: Since you require a paystub for Reg B, I believe that you are also requiring a verification document prior to issuing a GFE because Reg B is conceivably the earlier of the two events.

Me: Uh...

I get that they are two different topics entirely. But I don't see how requiring a verification document under Reg B couldn't be construed as requiring it for RESPA (the later event).

I have not come across a single bank that requires anything like a pay stub for Reg B purposes, for an "incomplete application" that starts the first clock for approve/deny/NOIA. A pay stub would be requested verbally or in the NOIA immediately upon receipt of the incomplete application.

I would not go there.

Kaybee, if we want to put this horse down for good, what item(s) would you recommend be a part of my definition of "complete application" under Reg B.

I'm thinking...

An application will be considered complete when... completed on our required form, signed and dated or completed and submitted via our website, contains name/SS#/DOB/current address/stated income/current and previous employment, stated assets and liabilities/requested loan amount/requested loan purpose for all borrowers.

What do you think?

Watch what you call complete (triggering a credit decision) or incomplete.

You seem to be running back and forth between the two and I am getting whiplash.

For completed ap that means it is ready for a credit decision, what does underwriting typically require? Start there. Does your bank send conditional approvals subject to verification, appraisals, etc. or do you wait until you have all verifications and appraisal, etc. before approving with no "subject tos".

Base your policy on what the lending process actually is.

Kaybee. Thank you again for sticking with me. I really appreciate it.

I think I am on the same page but sometimes it is difficult to show via the forum. Yes, we would issue a conditional approval subject to verification of the documents referenced in my prior post. Anything less than what I listed would warrant a NOIA be sent.

Again, thank you.

FWIW, we do require a few pieces of info beyond the 6. So far it has not been a problem as they are needed in order to pull credit and quote rate and fees (we sell to secondary market).

In addition to the 6
- Date of Birth
- Address
- type of loan interested in, i.e. conventional, FHA, VA, etc.

BTW, this has been a good discussion and has helped me to clarify some of the finer points on that 30 day thing.

The type of loan is on the 1003, is it not, as well as borrower address, property address, and other data? A partially completed 1003 can start the clock of course.

So if I am interpreting one of KayBee's responses correctly is it safe to say that if a phone conversation takes place in which a potential customer inquires about loan rates, winds up sharing their income and is told I'm sorry, we won't be able to help you based on your income - that warrants an AAN? Sounds to me like a credit decision has been made even without a written application, let alone a "completed" one. If that is the case, how would we proceed to send an AAN if the caller does not supply their address?

NKP, that is correct. A credit decision was made base on income only your LO has just discouraged a loan applicant from applying. A LO may not decline a loan that should come from your UW, after a credit application has been received.

If enough information has been collected to make a decision and a denial or approval has been indicated to the applicant, this interaction between a lender and prospective borrower is an “application” for the purposes of Regulation B. This is true, regardless of the amount of information collected by the lender, lender application procedures, fees paid to the lender, whether the prospective applicant has identified a specific property or loan amount, or whether the communication is written or verbal.

The commentary also states:

[/i]A creditor is encouraged to provide consumers (business applicants as well) with information about loan terms. However, if in giving information to the consumer the creditor also evaluates information about the consumer, decides to decline (or approve) the request, and communicates this to the consumer, the creditor has treated the inquiry or prequalification request as an application and must then comply with the [adverse action] notification requirements under Section 1002.9. Whether the inquiry or prequalification request becomes an application depends on how the creditor responds to the consumer, not on what the consumer says or asks.[i] [Commentary to §1002.2(f) #3]

Thanks for your responses. So what do most banks do here - disuade the LO from "declining" the caller or ensure that the LO obtains the caller's address at the onset of the conversation in case an AAN is needed? Any other options? Wondering how realistic either scenario is since we really can't even track that these calls came in without recording them!

You could establish a process where a decision is not made, where the inquirer is told something like "without a complete application we cannot evaluate all factors that would go into a decision and we encourage you to apply so that a proper determination can be made,"

That way you keep the inquiry "alive" and do not trigger adverse action.

Right, thank you.

NKP, I agree with KB. We instruct or LOs to never use the word "problem" and they do not discuss approval or denial. We use a "letter of incompleteness" with a similar wording KB used to let them know we must have a application before we can tell them anything.