If a customer has not made an offer yet but requested a prequal to determine whether they could make an offer, am I correct that this would be an application for TRID since a property was identified though no offer has been made?

If they provide you the six elements of a TRID application, you owe them a LE. How else do they shop for a loan and figure out if they can afford a bid that they might be contemplating.

1026.2(a)(3)(ii) For transactions subject to § 1026.19(e), (f), or (g) of this part, an application consists of the submission of the consumer's name, the consumer's income, the consumer's social security number to obtain a credit report, the property address, an estimate of the value of the property, and the mortgage loan amount sought.

I agree have always applied it that way, but I see a lot of conversations implying there is no property identified until they make an offer or have a contract.

It depends on if the consumer submitted the information to the institution. If they have, then you have an app. Not sure how you can argue you need a contract any more than you can argue you need proof of income or anything else. However, you don't have to ask for it. Just because the consumer has a property in mind doesn't trigger anything.

There are some originators, primarily independent brokers/MLOs from my experience, who incorrectly believe a LE is not triggered unless the applicant has a contract to purchase the address they provide.

These individuals are wrong. Reg Z does not require a contract, only that the applicant provide an address and estimated property value.

The CFPB's TRID FAQ expressly address this issue:

4. Is the requirement to provide a Loan Estimate triggered if the consumer submits the six pieces of information in order to receive a pre-approval or pre-qualification letter?

Yes. If a consumer submits the six pieces of information that constitute an application for purposes of the TRID Rule to obtain a pre-approval or pre-qualification letter for a mortgage loan subject to the TRID Rule, the creditor is responsible for ensuring that a Loan Estimate is provided to the consumer within three business days of receipt of the last of the six pieces of information. 12 CFR §1026.19(e)(1)(iii). See comment 2(a)(3)-1. The fact that a consumer submits the six pieces of information to obtain the pre-approval or the pre-qualification letter does not change the obligation to ensure a Loan Estimate is provided. The consumer has submitted the six pieces of information that constitute an application for purposes of the TRID Rule and, thus, the requirement to provide the Loan Estimate has been triggered.

rainman - Just trying to educate myself because I have grappled with this ever since TRID went into effect. This may sound silly, but is there anywhere that defines what "submission" of the information is? For example, if a borrower is prequalified, then emails the MLO and says they are attempting to buy a specific property (listing the address) is that considered a submission that would trigger the LE assuming all five other pieces of information are known? Or do they have to specifically ask for their application to be updated with the address? What if they say they are "hoping" to buy, "considering making an offer", or even..."we narrowed our search down to one of these two properties"? The MLO would have an address to go with their prequal...but it seems really...soft. Can the lender define in policy or procedure how it accepts the submission of applications?

Over the past 15 years we have gone from applications being very defined events where a borrower meets in person with a loan officer to complete an application to, sometimes, much more nebulous events where the borrower information sometimes comes in bits at a time though various channels (internet, email, phone, in-person) even on the same application.

Thanks for the input.

says they are attempting to buy a specific property (listing the address) is that considered a submission that would trigger the LE assuming all five other pieces of information are known?

I'm curious to what one's rationale would be for claiming the consumer did not provide/submit an address in this situation.

Eric,

Personally I think the CFPB has taken this beyond what the regulation actually says, but that ship has clearly sailed. The regulation says an application is information submitted FOR THE PURPOSES OF OBTAINING AN EXTENSION OF CREDIT. In your situation, assume that the applicant got their prequal letter without an address, and emailed the MLO to say "hey, we're going to put an offer on the house at 123 Elm! We'll let you know if it's accepted so we can move forward with the application." I'd say they didn't submit the address for the purpose of obtaining credit, but just as a friendly update. But here's what another paragraph of the CFPB FAQ says:

Once the consumer submits the sixth piece of information that constitutes an application for purposes of the TRID Rule, the requirement to provide the Loan Estimate is triggered. Comment 2(a)(3)-1. For example, if after receiving the pre-qualification letter, the consumer submits the property address (i.e., the sixth of the six pieces of information that constitute an application under the TRID Rule), the creditor is obligated to ensure the Loan Estimate is provided to the consumer by the third business day after submission of the property address.

With that FAQ sitting out there, it's tough to say that an LE shouldn't be issued in my example.

Dan and rainman...I totally agree and that is how I have always considered it and trained it. Its just that operationalizing it is another thing altogether. For some reason I always picture a person jotting down the six pieces of info on a piece of paper, rubber banding it to a rock, and throwing into the lobby of a branch location (you know, like a murder threat or something). Application? I know that is a ridiculous hypothetical, but where is the line?!?

The line is that you set what you consider an application for credit.

Regulation Z establishes what an application is for the delivery of a Loan Estimate in 1026.2(a)(3)(ii). The fact that an individual gives you the six pieces of information (or less if you so choose) does not mean you have an application for credit. It only gives the creditor the information to make a good faith estimate of settlement cots and what a potential interest rate might be along with disclosing other mortgage account features that you offer. The entire idea of a Loan Estimate is to allow a consumer to shop among creditors. Placing additional burdens on the consumer to do so is counter to the intent of the regulation.

An application for credit is defined in Regulation B in 1002.2(f). They are not the same.