Bank management has decided once they receive an application they intend to get the customers intent to proceed before they issue the Loan Estimate. They said unless compliance can point out differently that they cannot do the intent to proceed first that they are proceeding with that process. Could anyone point me to the actual part of the regulation that states that because I have looked, and looked. I see that before you can charge a fee or request supporting documentation that you need the intent to proceed but no where does it say before you issue an LE. I apologize for bringing this up again.

Once they receive a complete application they are required to issue the LE.

In reading the commentary to 1026.19(e)(2)(i)(A) seems clear to me that you cannot get an intent to proceed until the disclosures (Loan Estimate) has been provided:

Here is the text of the commentary:
19(e)(2)(i)(A) Fee restriction.

2. Intent to proceed. Section 1026.19(e)(2)(i)(A) provides that a consumer may indicate an intent to proceed with a transaction in any manner the consumer chooses, unless a particular manner of communication is required by the creditor. The creditor must document this communication to satisfy the requirements of § 1026.25. For example, oral communication in person immediately upon delivery of the disclosures required by § 1026.19(e)(1)(i) is sufficiently indicative of intent. Oral communication over the phone, written communication via email, or signing a pre-printed form are also sufficiently indicative of intent if such actions occur after receipt of the disclosures required by § 1026.19(e)(1)(i). However, a consumer's silence is not indicative of intent because it cannot be documented to satisfy the requirements of § 1026.25. For example, a creditor or third party may not deliver the disclosures, wait for some period of time for the consumer to respond, and then charge the consumer a fee for an appraisal if the consumer does not respond, even if the creditor or third party disclosed that it would do so.

I'd add to ComplianceMN's comment above in that I believe many systems are being setup to not allow the ITP to be shown within the system until disclosures have been generated. We are currently working out of 2 systems since we are transitioning (terrible time for that) and both systems are setup to not allow the intent to be expressed until the LE has been generated. That may not help to substantiate it from a reg perspective but I'd look at your LOS and see if it functions in a similar fashion and maybe that can just add to the argument.

If we are utilizing a form to obtain intent to proceed, may we still consider an oral intent to proceed sufficient and document it, or are we bound to make them sign the form.?

In other words, we have a form, so we must use the form and are closing the door on any other option of the borrower giving us their intent.

Not bound unless your procedures state otherwise. You could just document oral intent on that form.