RESPA Completed Application

I tried doing a search but did not see this question in any recent posts. We are having an ongoing problem getting 3 day packages out "on time". One of the causes of this problem appears to be when an application is considered complete. Some of our lenders feel the application is complete when they have enough information to underwrite the loan - others feel that when the application hits their desk with the check for the appraisal and credit report then it's complete. And our processors think it's the date they receive it. I can't find a regulatory definition --does anyone else have a definition or a process that works for them. I need HELP!!

Opinions are mine and mine alone.

If you look to the definition of application in RESPA, it does not refer to a "completed" application and Reg Z refers to RESPA in determining applicability for GFE requirements. The submission of financial information, along with a property address, in anticipation of a credit decision is the only requirement. This should not be confused with the timing requirements of Reg B once a completed application is received. Under Reg B, your own policies determine what is considered a complete application.

I suggest referring to Reg. B, 202.2(f) as to identifying the "date" you receive an application. The 3 days is in reference to the date you obtain an application in a form that is acceptable to you as creditor. It is not the date of a completed application or the date a particular processor or other staff member receives it.

Based on your summary, it seems the "date the application hits the desk with a check" is the closest date of the 3 provided. (If you have a number of branches that receive and forward applications to a central processing point, it is the date the branch receives it, not the central processing department.)

Good luck. Opinions are mine, not of my employer.

RESPA defines "application" as:
"Application means the submission of a borrower's financial information in anticipation of a credit decision, whether written or computer-generated, relating to a federally related mortgage loan. If the submission does not state or identify a specific property, the submission is an application for a pre-qualification and not an application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to an application for a federally related mortgage loan."
Thus, when an application contains financial info & a specific property, the timing begins for providing disclosures.

lnuechterlein - I guess I have to respectfully disagree that you should refer to Reg B for guidance when attempting to comply with RESPA. They have their own very distinct definition of an application.

I have recently been through some very interesting audit items. One thing I have realized with RESPA, as rlcarey says, Reg B and RESPA are two very different items. When receiving applications in the mortgage arena, at the time you receive the application you must send out your GFE and early TIL from the date you receive the app. I suggest a use of a date stamp (which we implemented) and training with your loan processors, lenders where to place the stamp.

I have found this process has cleaned up my "3-day" problem.

Sue, this is how we have decided to define a complete application. Maybe it will help. Dan

COMPLETE CREDIT APPLICATIONS
June 20, 2002

Loan applications are complete when there is enough information to begin the credit decision process, not when we have all the information to make the credit decision.

If the applicant(s) completes the following, you have enough information to begin the credit decision process.

· The personal information section
· The employment and income section
· The dollar amount requested (Special note for residential loan applications - the dollar amount requested triggers Reg. B, however a dollar amount requested and a property address is required to trigger RESPA and/or HMDA).
· Your clock starts ticking for the required notification periods, i.e. 30 days for Reg. B and 3 days for RESPA.

Please note that for Reg. B, the 30 days are calendar days, and for RESPA the 3 days are business days. Also “within 30 days” or within “3 days” means the notices are to be dated on, or before the 30th or 3rd day.

Effective immediately:
· The loan officer will document the purpose of the loan request;
· The loan officer is responsible to assure that all new loan applications are signed and dated by the applicant(s);
· Date stamp, or note the application with the date we receive the application.
· It is the PSB’s “standard practice” to allow existing borrowers to “update” an existing application if it is less than 6 months old. The lender will be responsible to have the applicant(s) sign and date the application attesting the updated information is correct including the purpose of the new loan request;
· The loan officer is responsible to assure we inform the applicant(s) within 30 days from the date of the application the application’s disposition.
If:
· The loan is approved as requested, the loan officer will make a notation on the application the date and to whom they spoke to advising the application’s approval. (This is not necessary if the loan closes within 30 days from the application date.);
· The application is incomplete and the loan officer is unable to verbally obtain the needed information, within 30 days from the application date, they must send an Adverse Action Notice, also known as Notice of Action Taken, requesting the missing information and giving the applicant(s) a reasonable time period to respond. (30 days is suggested);
· We make a counter offer, it should be done in written form, or the reason for the counter offer should be noted on the application. If the applicant(s) verbally refuse the counter offer, within 30 days from the application date, we must send an Adverse Action Notice informing the applicant(s) of the counter offer, and the reason we denied their original loan request. If the applicant(s) verbally accepts the counter offer, but do not come in to close the loan for any reason, within 30 days from the application date, we must send an Adverse Action Notice informing the applicant(s) of the counter offer, and the reason we denied their original loan request.

You have gotten some very good advice here from BOL users. Just to clarify, (and perhaps have the last word) only Regulation B has a "completed application" definition and that exists only for purposes of establishing the timing for making a decision and sending the notice.

Regulations Z and X (RESPA) are shopping regulations and, as such, want disclosures to go as early as feasible. As soon as you have the information needed to generate the disclosure (customer's financial information, loan amount, and property address) these regulations start the 3-day early disclosure count.

I strongly recommend that you use a date stamp to clarify the date the application was received. It helps with a lot of compliance -- and it can also be the necessary piece for salvage when the examiners are in.

I know I'm reviving an old thread but this is pretty close to my dilemma. I believe we have an application because we pulled a credit report however, we gave the applicants information regarding our loan products and a list of items to bring to us for us to complete our decision (including check stubs, etc). The customers went on their way but never chose a loan program before they left. Well, they never returned with the additional requested information. My dilemma is - how does one do early disclosures in this situation? Or do we even need to worry about the early disclosures? Thanks,

You can pull a credit report without a written application. And RESPA wants a property address before you have an application. If you didn't have property, there is no app and no early disclosures.

Perhaps this could be the case based on the lack of effort.

Let's "assume" that they listed a property but didn't select a loan program. How do early disclosures work in a circumstance like this?

Depending on what you define as a "program" you may or may not have an application. I assume there were no terms specified. Then it was likely a prequal at best.

If there were, then you would have an app and disclosable terms based on what was discussed.

Reg X defines an application as, "the submission of a borrower's financial information in anticipation of a credit decision, whether written or computer-generated, relating to a federally related mortgage loan. If the submission does not state or identify a specific property, the submission is an application for a pre-qualification and not an application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to an application for a federally related mortgage loan." If you have something in writing from the applicant (whether on a standard app or not), that includes some financial information and identifies a specific property, treat it as an application and provide timely disclosures.

I'm not arguing that we don't have an application for RESPA purposes I believe that we do because we had sufficient information to pull a credit report - we asked them to bring in supporting information like pay stubs, deposit accounts, etc. There is also a property identified. The customers walked away with information on a 30 year fixed rate loan and our 5/1 ARM program disclosures but never indicated to us which type of loan they wanted before they left and then they never returned. I'm trying to find out if in this situation whether or not we should have provided early disclosures. And if we should have provided early disclosures, how we should have went about doing so.

I wouldn't say I had an app because I could pull a credit report. Getting the latter takes a business reason, but little information.

Assuming you do have a bona fide app, either send disclosures based on the product they were opting for, or consider sending one for each they were interested in. You don't have many other options, except to try and avoid this in the future.

"You don't have many other options, except to try and avoid this in the future."

No kidding.

Quote:

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· The loan is approved as requested, the loan officer will make a notation on the application the date and to whom they spoke to advising the application’s approval.);

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Are you referring to both "final approval" and approval subject to...receiving appraisal, sales contract, etc. Or would you consider approval subject to an appraisal an incomplete app.?