When we receive an application, we mail the prelims within 3 days as required. Included in the prelim packet is an Intent to Proceed form. This document sometimes comes back to us signed and other times does not. Upon conditional approval and without charging any fees, we proceed with ordering the appraisal, title work, flood, etc. regardless of having received the Intent to Proceed back from the customer (we have evaluated this practice from a cost perspective and have found that we are able to stop services prior to completion for the few loans that do not close.) If we have not received the signed Intent to Proceed by the time the Closing Disclosure is mailed, we send the form out again with the CD. If we have still not received the Intent to Proceed at closing, it is included in the closing packet for a signature. Fees are only collected at closing.

I know one point of debate with the Intent to Proceed is whether or not you can request/receive verification documents. My interpretation has always been that you may request but you may NOT REQUIRE verification documents prior to receiving the Intent to Proceed.

The prelim packet contains a list of the documents required to progress with the loan. As the application progresses (even w/o the signed Intent to Proceed),these verification documents are received as requested by the bank.

We have begun to question whether or not we should be issuing the CD if we have not received a signed Intent to Proceed (assuming a written Intent to Proceed is required by bank policy). In my mind, the CD and Intent to Proceed are not linked by the regulation. Having said that, is there a problem with the fact that at times we have issued a CD or are at closing before we receive a signed Intent to Proceed? Could it be interpreted that we required verification documents prior to receiving the Intent to Proceed because we have made it to the stage of issuing a CD or even all the way to closing? (We have elected not to accept verbal Intents to Proceed because of the large risk of receiving/documenting a verbal Intent to Proceed before the prelim packet is considered received by the reg – 3 days.)

Thanks in advance for any responses!!

I think you are somewhat confused.

You cannot require verification document until you deliver the LE (1026.19(e)(2)(iii))

You cannot assess fees (other than the credit report) until you receive the intent to proceed (1026.19(e)(2)(i)

Requiring a written intent to proceed via bank policy is falling on your own sword.

I doubt if many investors will be to excited about intent to proceed signed at closing.

Thanks for the correction Randy. You're right, my brain and fingers weren't on the same page. Let me provide some additional information. This is not the procedure in our Secondary Market division, however, I am confused as to why you think requiring a written ItP is a mistake. By doing so, we minimize the risk of a LO documenting a verbal ItP before the customer received the LE, resulting in a violation. If we haven't charged any fees until closing, why is the timing a problem? What's the violation?

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.

By doing so, we minimize the risk of a LO documenting a verbal IP before the customer received the LE, resulting in a violation.

So you don't know when a customer received an LE in order to know whether or not receipt happens? If you want to insist on a written intent to proceed, most banks just tell the customer to return the intent to proceed or the bank is not going to take any further action. Leaving this until closing is just sloppy and I would not be surprised if the regulators did make UDAAP grumbling noises ,because apparently the application process, initial disclosure process and the intent to proceed is not being thoroughly explained very well to your applicants. The idea is that they know the application process before they get so far into the process that they feel they no longer can back out and this is partially documented by them giving you an affirmative on the intent to proceed early in the application process.

Are you issuing the conditional approval without Intent to Proceed?

This one doesn't sound good . . . says the former federal regulator

Our Setup team who produces the LE sets an outlook calendar event the day after assumed receipt with the LO to follow up for intent. I hope your team isn't collecting appraisal fees (or trying to collect appraisal fees if the loan doesn't close and you never obtained intent).

Get it... get it early, document, and you CYA

If you need another to jump on and tip the scales, I'll just say flat out, STOP THIS NOW!
Revamp your cover letter that goes out with the LE and state: 'We cannot proceed with your application until we receive your intent to proceed. Please sign and return this document or call you loan officer at your earliest convenience. If we do not hear from you by (date) we will have to close your file for incompleteness.'
You will have covered all your bases for all the Regs.