Can bankers out there share how they plan to "sequence" application information so the Loan Estimate Disclosure is provided with more "accurate/helpful" information?

Is anyone planning on updating/revising their "online" application process?

Any comments/suggestions are appreciated.

OK, I'll chime in with my opinion. Proceed with caution in this area! You're certainly allowed to some degree to manipulate the "sequence" of when you ask a consumer for any one of the six required application items. Thus allowing you to gather other information (such as fixed, variable, term, etc.) prior to triggering the Loan Estimate 3-day delivery requirement. In fact it's covered quite thoroughly in the section by section analysis of the final rule. However, you don't want to be seen as discouraging the completion of application. In other words if the customer offers the information you don't have the right to ignore it or tell them you're not ready because you don't want to have to provide shopping disclosures yet. Just my two cents.

Do you think it would be viewed as discouraging applications if an online application was designed to require information in addition to the six pieces (i.e., the application could not be submitted without the additional information (e.g., loan type))?

You can ask anything you want, but once you have received (key word there) the requisite 6 pieces, you have an application and your clock starts ticking toward the Loan Estimate deadline.

You could ask for that information prior to them getting to the application page that has all six items, however not letting them actually submit the application because you required additional information I think does not meet the regulatory requirements.

John and Randy, thank you very much for your responses.

I think I was leaning toward John's "key word," received. Our process would be that the clock would start when the submitted application was received by the bank. What they want to do, however, is not allow the submission until some other information is included on the form/application. To me, as long as the information required is not verification information, I think it would technically be ok, but I am concerned that the process might be viewed as discouraging applications.

Randy, you think even if the additional information required wasn't verification information it wouldn't be compliant?

One way to handle an online application that's submitted screen-by-screen is to delay input of the applicant's SSN or other TIN until the final page of data. In that way, if you have strict limits on WHERE you'll lend, you can filter applications out that start with a property address that's outside your lending area.

Yes, but if they are requiring some other information other than the six items before they can advance to the next screen (verification information or not), I think that might be an issue.

Thanks again for your responses. I very much appreciate your opinions.

Here's the CFPB take on online applications:

…an online application system designed to reject or refuse to accept applications on the basis that they lack other information that a creditor normally would prefer to have… beyond the six elements, would not comply with the Rule. [Outlook Live Webinar 8-26-14]

That said, what about contact information, I certainly would think (at least logically - I know compliance logic don't mix you could require a mailing address/email address (to deliver disclosures) and a phone # (to follow up) without too much criticism. However, I think the CFPB was quite clear in the webinar , if your online system doesn't allow the applicant to click submit absent any information beyond "the six" you lose!

Thank you, Jerod. That will definitely support my response to the business unit.

Does anyone not understand that you CANNOT issue a valid accurate (or to use an old term, "good faith") loan estimate with just the six pieces of information? So, you have yet another government-created "Catch-22"! So instead of stating a nebulous statement that we might be seen as "discouraging an application", does anyone have any "real world" suggestions on this subject?

We are leaning in the direction of withholding the MB's ability to input income until certain other fields necessary to the creation of a valid LE are first input. Our reasoning would be, what good is it to issue an inaccurate LE?

You can sequence the information so that, as quickly as possible, you obtain information as to the product desired so that you can then provide a specific LE.

Alternatively, you can discuss that with the customer within the 3 day period after receipt of the 6 pieces of info that trigger the LE and obtain the product specific info that is needed.

Alternatively, if you obtain the 6 pieces and cannot obtain product specific info to provide the LE as accurately as you would like, you can provide an LE on your "typical product". You do not have to provide one for every possible product. (The CFPB discusses this in the issuance for the integrated disclosures.) If the customer then comes back from wherever they were that prevented a conversation and selects a different product, you have a changed circumstance.

Not sure how you cannot... we have been issuing accurate GFE's based on the six pieces of information for the last five and half years now. We've streamlined fees and vendors, taught LO's how to obtain accurate information before issuing, and centralized some of the duties to ensure accurate GFEs.

I see no value in sequencing or intentionally declining to accept any one of the six pieces of application data across the board. I want to make money, not fight senseless argumentative fights with examiners about their concerns of us not being transparent with our borrowers... that same lack of transparency by some that got us all enjoying the 'benefits' of these new rules.

We are leaning in the direction of withholding the MB's ability to input income until certain other fields necessary to the creation of a valid LE are first input.

If the MB is in possession of the income information then you have the information. Eliminating their ability to input it into your system does not negate the fact you, the lender, have that piece of information.

I would never make sequencing "the rule" in my process unless there were some very unusual circumstances. If a bank has been issuing good GFEs to date, it should not be a major transition to issue good LEs.

Let me put a twist on this. We do not have an on-line application - rather we have a lead collection system. Essentially, it collects name, phone number, email address, type of transaction, state (we only lend in one state) and estimated loan amount. In short, it's missing multiple items.

No where do we say that this is a loan application - in fact, we just say "Get started"

Are we okay?

You can call it your Great Aunt Tessie if you like, but if it collects the six elements of information that define an application, you have .... an application.

SnuffytheSeal, I think you are OK since you do not collect all 6.

Our online application system does not collect loan information and property information in the sequence of screens and lets the applicant submit the application. Once the loan officer is notified about the submitted application they contact the applicant to obtain the loan and property information. The disclosures are then sent within 3 days of the lender receiving the final information.

Would this be okay under the rule permitting lenders to set up systems to collect the 6 pieces of information that best suits the creditor?

I'm bumping this thread back up - I have the same question as FLSC girl

We currently use an full online application and I have recommended moving to just a questionnaire/lead generator.

As an alternative, the department asked if they could omit one or two pieces of information from the application so that the Bank did not collect enough information to trigger an application. For instance, social, or estimated property value.

Based on what I am reading on this thread (and the CFPB webinar discussed), the Bank cannot require additional information to be entered to submit if it has already collected the six triggering items.

What about intentionally omitting the collection of these fields? I'm thinking it would be an issue but am not sure.

Thank you everyone for your help.

Go to slide 30 and listen to the Q&A.

https://center.stlouisfed.org/courses/outlook-live/session-6-17-14/index.html

Randy... you are THE MAN!!!!

My own paraphrased notes from the webinar:

- Q - does the creditor have to collect all six pieces of information at once, or can they strategically collect it to control when they trigger an application

A - The rule only requires that the Loan Estimate is provided within three business days - the obligation is triggered when all six pieces of information are collected, the reg does not state that creditors control when all six items are received. The creditors may hold off on collecting something like the social security number to control when the application is triggered - this was anticipated by the bureau.

THANK YOU!!!

I'm still a little leery about requiring them to complete a whole application and just omit, say the SSN in order to submit the information.

Yes, the SSN could be problematic if an examiner discovers that you had the SSN in the file drawer of the MLO taking the application from another application handled a month earlier. And it runs in the face of the goal to get the LE out promptly.