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#2265311 - 01/27/22 03:17 PM Lock before application
MortComp Offline
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Is it not a TRID violation for the a loan to be locked prior to the application date?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2265313 - 01/27/22 03:30 PM Re: Lock before application MortComp
rlcarey Offline
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I guess I am confused as to how that would be possible and why a bank and a consumer would enter into such a written agreement prior to the consumer ever applying for a loan? I surely hope there are no consumer penalties built into this rate lock.
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#2265314 - 01/27/22 03:36 PM Re: Lock before application MortComp
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I don't see how you can issue a lock and not have the pieces for an application.

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#2265316 - 01/27/22 04:04 PM Re: Lock before application MortComp
Truffle Royale Offline

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It would be possible for a bank to lock a rate with an investor prior to receiving a complete application. Risky, but possible. And it's not a TRID violation.

Randy referenced the signed written rate lock agreement which is the vehicle for locking the rate with the borrower.
Are your LOs getting a signed written rate lock agreement from the borrowers before they have an application?

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#2265328 - 01/27/22 05:12 PM Re: Lock before application MortComp
dutchbltz Offline
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I think it would be very unlikely to have locked a rate without having the 6 data points that constitute an application. The LO may not have written them down on a paper application, but I strongly suspect that the application was made - perhaps verbally. It makes no sense to lock a rate otherwise.

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#2265505 - 01/31/22 06:03 PM Re: Lock before application MortComp
Truffle Royale Offline

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Not trying to argue the point about it being sensible or not. Just stating that I've seen it happen. Mostly it was back when rates were more volatile and the borrower would say 'grab that rate and I'll stop by tomorrow to give you all the info.' Yes, it was a risk decision on the bank but it can happen.

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#2265508 - 01/31/22 06:16 PM Re: Lock before application MortComp
rlcarey Offline
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Yes - TR, but that usually did not involve a written agreement executed between the bank and a consumer. The bank would take the risk and lock the rate with the investor. This is the TRID forum, so I assume we are talking about a rate lock from the TRID perspective.
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#2265519 - 01/31/22 07:15 PM Re: Lock before application MortComp
Truffle Royale Offline

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I didn't get that from the OP's post, Randy, nor did they answer the question when I asked it above.
It would be great to know if they are talking about locking the rate verbally or if it is, as you pointed out it should be for this forum, an actual signed written rate lock agreement.
Last edited by Truffle Royale; 01/31/22 07:16 PM.
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#2266480 - 02/16/22 07:07 PM Re: Lock before application MortComp
Beachbum, CRCM Offline
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I wonder if this post refers to a "Lock and Shop" program? These programs take preapprovals to the next level. The
"applicant" fills out a complete application with the exception of property address. All other underwriting is completed except the underwriting pertaining to the property. The "applicant" pays a fee and signs a preapproval with a 60-75-90 day rate lock that will give the "applicant" time to find a property and complete the application process. A Goggle search revealed multiple companies offering this product. I am not sure how they can collect a fee for this product without intent to proceed and how can the "applicant" give intent to proceed if the bank does not have all 6 pieces of an application.
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#2267187 - 03/04/22 03:35 PM Re: Lock before application Truffle Royale
MortComp Offline
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Apologize for a late response. We are not getting a signed lock agreement. This came out during hmda review and our software kicked it out as an error.

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#2267985 - 03/21/22 08:10 PM Re: Lock before application MortComp
Gertie Offline
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Late to the conversation.... I was told today that we have 1 investor offering a "Lock & Shop" program as described above (no address yet identified). I have multiple concerns about it. We do not have written lock agreements with borrowers. There is no fee for the 90 day lock, but if there is a need to extend the rate lock, there is an extension fee. There is also an option to purchase a "float down" for 1%. Currently we do not collect any fees until consummation of the loan.

If we were to go with this program, could we collect the float down and extension fee upfront because the application does not yet meet the 6 requirements for TRID (although the expectation is that it will become a loan subject to TRID)?

I am also concerned about fair lending. Currently we use a pricing desk, and depending on the borrowers information compared to investor requirements, the pricing desk sends back the best rates that are within our pricing parameters. Since we only have 1 investor offering this type of program, the borrower may not actually get the best deal.

Thoughts would be greatly appreciated.

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#2267990 - 03/21/22 08:32 PM Re: Lock before application MortComp
rlcarey Offline
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Are you not required to provide every prospective applicant an anti-steering disclosure? How would they not know about this product? .
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#2268002 - 03/21/22 09:54 PM Re: Lock before application MortComp
Gertie Offline
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No, we are not required to provide an anti-steering disclosure. Although, I think it is time we make use of the safe harbor it provides. Thank you for thinking of it.

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#2268005 - 03/21/22 10:29 PM Re: Lock before application MortComp
rlcarey Offline
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If you are selling to multiple investors, how can you not be required to provide an anti-steering disclosure?
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