intent to proceed via CloD?

We know that "silence" doesn't count as intent to proceed, but we also don't want to overcomplicate our process either.

We do not charge any fees prior to closing on some of our consumer real estate secured products. If the consumer provides a verbal intent to proceed on any of these products, would the borrower's signature on the CloD serve as documentation of the intent to proceed for record retention purposes?

Intent to proceed means 'after seeing the LE, I want to go on with underwriting this loan.' Signing the Clod means 'I agree to the costs for getting the loan as approved.' imho, you're going to have to complicate your process to show intent before you proceed to closing.

Truffle is right. You should document the consumer's intent to proceed before committing the consumer to any fees other than the bona fide reasonable cost of obtaining a credit report. It can be a document signed and returned by the consumer saying "Let's do this!"; an annotation in the mortgage file that the consumer called to give the go-ahead; an email from the customer to the same effect; or any other memorialization of the consumer's intent. Getting the signature on the closing documents doesn't cut it.

This sounds like an absolute and if so it's not entirely true. Maybe that's not what you meant and I misunderstood. So just to clarify for everyone else, any information you have prior to issuing a LE better have been utilized for underwriting purposes prior to issuance of the LE in order to meet the LE "good faith" requirement (for example IF you have a purchase agreement, credit report, tax return, pay stub, w2, etc.). In other words 100% of underwriting doesn't necessarily happen after the LE has been issued. Some underwriting must be completed before issuance of the LE. If you have information and don't use it, you lose it. You don't get to use for a CofC later on (except in relation to 10% cumulative scenario).

These disclosures must be provided in good faith. …if any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure based on the best information reasonably available to the creditor at the time the disclosure is provided to the consumer. The “reasonably available” standard requires that the creditor, acting in good faith, exercise due diligence in obtaining information. [Commentary to §1026.19(e)(1)(i) #1]

From the commentary:

"Oral communication over the phone, written communication via email, or signing a pre-printed form are also sufficiently indicative of intent if such actions occur after receipt of the disclosures required by § 1026.19(e)(1)(i). However, a consumer's silence is not indicative of intent because it cannot be documented to satisfy the requirements of § 1026.25. For example, a creditor or third party may not deliver the disclosures, wait for some period of time for the consumer to respond, and then charge the consumer a fee for an appraisal if the consumer does not respond, even if the creditor or third party disclosed that it would do so."

IMHO, you would not comply with record retention requirements.

Jerrod, I wasn't speaking to how to prepare the LE, but rather just focusing on the OP's question regarding intent to proceed with an eye to the fact that loan approval would not occur at the same time as LE delivery.

Thanks for the feedback. Our team is split: one side still insists that since we don't charge fees prior to closing, and only would prepare a CloD if the customer verbally indicated intent to proceed after receiving the LE, then the signature on the CloD would suffice.

Are you saying you'd order an appraisal, title work, etc. and eat the fees yourself if the borrower later says "no, i don't want to proceed"?

Suggestion. I don't know about your LOS, but mine spits out an Intent form with a signature line. If your borrower gives you verbal intent (as you indicate), you could easily notate that on an intent form the same way you would notate joint intent on a phone app.

I see no reason to drag them back in the bank unnecessarily, but you do need some sort of 'proof'.

But if you don't get the intent to proceed before then you could fall into a situation where you might have to absorb the cost of an appraisal for example.

For example: You approve a loan. The appraisal is ordered and received from the appraiser. Right before you issue your CD the customer withdraws the request. You have not documented their intent to proceed, so you can't charge them for the appraisal, so you have just cost your self a few hundred dollars, when you could have just gotten the intent to proceed earlier.

This makes no sense to me.

And that doesn't consider the fact that your bank would be bucking the norm and the expectation of virtually any examiner who graces your doorstep to review your TRID compliance. It simply is not worth the risk and hassle to take such a bleeding edge stance.

And I'll tack this on FWIW, no intent to proceed = no "required" verification documents. Meaning you can't require the applicant to supply anything beyond the "6" until you have a documented intent to proceed. What I don't get is what''s so hard for the team at JustSayJulie's bank to document a verbal intent to proceed? It's not complicated.

And, if you do ask for a verification document post LE delivery I would think that you would get the intent to proceed at that time so really it's a moot issue so long as the lender simply documents the intent to proceed.

I've overstepped (thanks for heads up John)! Darn brain opened up the GFE/Intent to Proceed drawer rather than the LE/Intent to Proceed drawer. Let me clarify, nothing in TRID delays a lender from requiring requiring verification documents before an intent to proceed. You simply cannot delay delivery of the LE due to requested verification documents. Sorry for any confusion!