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#2251244 - 03/25/21 05:29 PM TRID app but no loan term = disclose or WD/Deny?
Banker K, CRCM Offline
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Joined: Jan 2010
Posts: 293
Oklahoma
Hello, our secondary market lenders have asked us to pass along this question. Here is the background:

LOs state they have many refi requests where the customers are shopping for rates. They are taking these applications, pulling credit, and giving the customer specific rates with various options like 15 year term, 30 year term, etc. They state that sometimes after they run these scenarios, the customer never decides which terms they want to proceed with (or at least they don't tell them by the 3rd business day after application).

In those cases, it would be my opinion that the LO disclose (including the LE) based on one of the options and wait for the customer to respond (if ever). However, the LOs state that a lot of times these customers don't come back/respond and they'd rather not have to take the time to prepare all the TRID docs for something that is likely not going to proceed. They have asked if they would be allowed to shut the file down as a "withdrawn" or "denied" file since they don't have direction from the customer as to which loan term they want to go with.

Thanks in advance for your opinions, and sharing what your institution does in these situations.
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TRID - TILA/RESPA Integrated Disclosures Rule
#2251258 - 03/25/21 06:39 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
rlcarey Offline
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rlcarey
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Galveston, TX
I am confused - what do you mean they do not get back to the LO? If you have a TRID application - you owe them a LE. There is no requirement that the consumer has to reconfirm their application. On what basis are you planning on denying them because there is no express withdrawal.
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#2251262 - 03/25/21 06:45 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Banker K, CRCM Offline
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Joined: Jan 2010
Posts: 293
Oklahoma
I am in agreement that once we get the 6 pieces we have the app and the 3 day timing starts.

They take the app, pull the credit, and say to the customer "if you do the 30 year you get xx rate, if you do the 15 year you get xx rate" etc. Customer says okay I'll think about it and never says which term they want to go with. Day 3 approaches and the LO doesn't know which loan term should be disclosed, and is asking if that's a WD or denial by that point.
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#2251266 - 03/25/21 07:17 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,881
Galveston, TX
Since the LE is a shopping form - just send them one or the other or even both for that matter. Silence is not an express withdrawal.
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#2251267 - 03/25/21 07:19 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Banker K, CRCM Offline
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Joined: Jan 2010
Posts: 293
Oklahoma
Thank you. I was in agreement with this stance as well.
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#2251379 - 03/29/21 04:01 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
John Burnett Offline
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John Burnett
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Cape Cod
When did lenders EVER get the idea that the Loan Estimate and all the other trappings of TRID were supposed to be convenient for them? The purpose of the TRID rule is to get information to the applicant/borrower/consumer that they can use to make informed decisions concerning the options available to them when seeking a mortgage loan.

Sure, it can be a PITA to pump out LEs and only see a few that result in a loan. That's what happens when there are lots of alternatives for the consuming public. If you want better results, you need to sharpen your pencils or make your deals more attractive in some other way.
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#2251380 - 03/29/21 04:03 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Banker K, CRCM Offline
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Joined: Jan 2010
Posts: 293
Oklahoma
John...PITA...love this LOL. Thanks for the input - agree with you totally!
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Compliance - A Painful Addiction

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#2251465 - 03/30/21 03:27 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Tarhe Offline
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Joined: Nov 2006
Posts: 1,419
California
In the original post, it is said that credit is run and ALIENS has been received - the Loan Estimate is sent. But then no response is received back from the potential applicant. As you noted, no response is not considered "withdrawn". Would we then owe an adverse action notice so that we can close out the file within 30 days? Or should a Notice of Incompleteness be sent within the 30 days under Reg B? We have discovered a backlog of these types of transactions where credit is run but no follow up ever occurs. Do we owe AAN's on these - some go back many months.

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#2251466 - 03/30/21 03:33 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Banker K, CRCM Offline
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Joined: Jan 2010
Posts: 293
Oklahoma
@Tarhe, in our FI, we have enough info to make a conditional approval at that time. So my thoughts are that if we don't hear back from the customer after we send the LE and they don't return our attempts at contact, then we would shut the file down as ANA (approved/not accepted) WD. If we were lacking enough info to make an approval decision based on the info provided, then I think we would just deny for incompleteness and document our attempts to obtain that incomplete info.

If you want to mess with the NOI and tracking I think it's acceptable to do that if your letter meets the requirements from Reg B.
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#2251469 - 03/30/21 03:47 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,603
Bloomington, IN
we have enough info to make a conditional approval at that time.......then we would shut the file down as ANA (approved/not accepted) WD.

So you ran it through full underwriting and you have no outstanding conditions other than customary closing conditions? If not then you do not have an approved but not accepted. See page 127 in the 2021 GIR. Unless the applicant expressively withdraws the application you also cannot treat it as a withdrawn application.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2251475 - 03/30/21 04:06 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Banker K, CRCM Offline
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Joined: Jan 2010
Posts: 293
Oklahoma
Dan, question on that. Do the conditions have to be in writing to the customer? Or is verbal acceptable? I prefer in writing but at this point my current FI does not have a letter (my former FI had a detailed "conditional approval letter" and it was easy to determine whether a file would be ANA or not).
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#2251481 - 03/30/21 04:25 PM Re: TRID app but no loan term = disclose or WD/Deny? Banker K, CRCM
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,603
Bloomington, IN
Reporting ABNA is based on the FI making a credit decision approving the loan. There's nothing on page 127, or anything I'm aware of, that requires that decision to be communicated in writing.

Guidance for reporting an application as denied is on page 128.

Financial Institution provided conditional approval
specifying underwriting or creditworthiness
conditions that were not all met. Comments
4(a)(8)(i)-13 and 4(a)(8)(ii)-2.
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The opinions expressed are mine and they are not to be taken as legal advice.

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