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Mortgage Applicants Causing Non-Compliance?

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Question: 
I've been constantly running into a "You are not in compliance" issue in the company where I started working recently. Let's say I sent the application package to my client dated 12/01/2004. The client send the signed and dated package back one month later. My processor is insisting that the client should've dated it within 3 days. Otherwise, it's not in compliance. I think it does not make sense. If I send the package by regular mail it can take 5 days to deliver it, not to mention that the client may not sign it right away, and then it will take another 5 days to get the package. Please explain this 3 days compliance thing. I don't think my processor is interpreting it correctly.
Answer: 

Certain disclosure, i.e. the Good Faith Estimate and Early Truth in Lending statement, must be given at the time of application or within 3 business from receipt of the application. If it is an ARM product the ARM disclosure must be given at the time an application is furnished to the applicant or before they pay a non-refundable fee, whichever is earlier.

I am going to assume your application packet is a packet being sent for your client to complete and return an application request. If this assumption is correct, your 3 day notice, with the exception of the ARM notice, does not kick in until you receive the application.

The exception to this rule would be if you started the application process by telephone and the packet is just a follow up to the telephone application, the 3 days would kick in when you began the application process.

As a FYI, the regulations do not require the ARM disclosure, Good Faith Estimate, or the Early Truth in Lending statement to be signed by the applicant. However, your internal lending policies may.

First published on BankersOnline.com 1/16/06

First published on 01/16/2006

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