If race, sex and ethnicity were not collected at application should the method of collection be not collected based on visual observation or not applicable?

How the application was taken determines the answer to your question.

If the application was taken in person, then you must have their demographic information - based on visual observation. If a loan officer didn't see them (mail, email, internet, dropped off), then you code these 3 as "Information not provided by applicant" (3/6/3).