Under RESPA one of the items needed in order to issue a GFE is the property address. Can anyone tell me how they are documenting when they recieve this information.

One of the issues I am seeing is that I have several lenders who will recieve multiple addresses for just one loan. They average 3 to 5 different addresses for one loan request. The applicant finds a property and puts in an offer to get a purchase agreement accepted. When the purchase agreement falls through they find another property and the cycle starts over. Many of these are first time home buyer loans. But each time they put in an offer on a home they are informing the lender and hence the lenders has recieved a property address. Do we really need to issue a GFE on all these especially when the offer gets turned down and will not be the home that the loan will be secured by? And fees are affected by the locations of the property and not certain this would qualify for a changed circumstance reason.
Any thoughts are appreciated.

Personally, I'd rather wait to start all the clocks then create all this extra work and confusion. IMHO, it would be simplest to turn these applications into one single prequalification or preapproval and then just wait. When the property is actually (and finally) identified, issue your GFE and move on from there.

Here we get a 1003 filled out with everything but the property address. We do a prequal. When the OTP is accepted, the LO enters the property address and writes the date received next to it. That's the start of the GFE clock and all others.

Our "applications" can have only one address. If the borrowers want to complete several applications for several properties, that is their choice but it is a waste of everyone's time. Are borrowers really entering into several purchase agreements at once?

As TR said, collect all information except for the address and issue a prequalification or preapproval letter. This should be good enough (preapproval is better) to show the sellers that the buyers mean business. Then, once a suitable property is identified, complete the application and issue early disclosures.

Do we really need to issue a GFE on all these

That depends. The applicant changing property addresses would be a applicant requested changed circumstance therefore you would not have to issue a revised GFE unless a specific fee affected by the changed circumstances increases and you want to make sure you stay within tolerance. In that case you would issue a revised GFE.


Here we get a 1003 filled out with everything but the property address. We do a prequal. When the OTP is accepted, the LO enters the property address and writes the date received next to it. That's the start of the GFE clock and all others.

Who's not identifying the property, the aapplicnt or the loan officer by not asking for it or simply not listing it?

The acceptance of an OTP has nothing to do with a property being identified. If you are requiring the OTP as a condition to issue a GFE I think you are walking down a slippery slope. The OTP is a verification document and verification documents cannot be required as a condition for issuing a GFE.

Dan, it's me, TR! I'm the one who screams the loudest when someone takes an OTP prior to issuing the GFE/TIL.

I was responding to what I thought was the OP's question about how we do things. You can take my sentence about 'when the OTP is accepted' and change it to 'when the borrower calls with the address of the property they've decided to purchase' if you like.

I understand where TR is coming from. At my prior bank, our secondary market dept often had prequals where a person was just determining what they could afford. Then they went shopping. Our apps were filled out with address = TBD. As stated above, once they found a home that fit their qualifications, we added the address with a date and disclosed.

Having said that...I think Dan is just expanding on the chance that the OP could misinterpret things. Looking back at the OP, however,it seems their LO's aren't having much choice other than to disclose, as they do have an address(s) to work with.

Thank you all. I am following what you all are saying.
And no, luckily we don't use the receipt of the actual purchase agreement as the date we recieve the property address.

Short of telling a loan applicant to not ever mention a property address until they have an accepted offer to purchase agreement, it sounds like we will have to continue sending out the GFE when the applicant tells the lender an address and than continue reissuing if the property address changes due to previous purchase offers being rejected or falling through.

To Dan's point, agree that it can be somewhat ambiguous as to whether the applicant didn't identify a property or the LO chose not to put on the application to preclude the GFE requirements. Even though we have policies/procedures - and train periodically on it - I still get a little suspicious when I see a preapproval application come in from a lender with "TBD" for property address on the application, then 2 days later a complete application with signed OTP. I guess they shopped and found a home to buy pretty quick...

I haven't read over them for a while but I thought I had heard that the new early disclosure rules were going to address this loophole and early disclosures would have to be made.

Is it ok then to require the borrower to inform you of the date when they have a signed purchase agreement, and consider this the date the address was identified, as long as we don't require a copy of the agreement?

All they have to do is give you an address. Verification of the address is neither required or allowed.

A mortgage loan application and signing an earnest money agreement/sales contract are two totally unrelated events. I don't see any support in the regulation to force an applicant to enter into a sales contract in order to secure a mortgage loan.

The CFPB Exam Manual states with regard to "GFE Application Requirements":
An application can be in writing or electronically submitted, including a written record of an oral application.
If the application, written or oral, meets the 6 pieces of information it meets the test and early disclosure are required.

Good afternoon...

If a Realtor provides the property address (verbally or in email), does the Lender now have all 6 pieces? OR, does the FI's customer (the applicant) need to provide the 6th piece of information? Our internal auditors are stating that if we receive the property address (in any type of communication), we have an application. We disagree, shouldn't it be our customer?

For example:

The realtor sent our lender a copy of the title commitment they ordered on a property via email on a friday afternoon. On the following Monday, the customer walked into our branch with a PA and stated they found the property they would like to purchase. Would the application date be the Friday or the Monday when the customer told our Lender? Doesn't it need to come from the customer?

We have been doing research on this very question...any thoughts from anybody concerning this post?

Thanks!

Thoughts:
1)What is a realtor doing ordering TI?
2)Borrower is doing the applying, not the realtor. So I think I could argue that until the borrower supplies you with the six pieces, you don't have an application.
fwiw, the PA doesn't make the sixth piece. I would encourage applicants to call as soon as they identify a property.
3)"Doesn't it need to come from the customer?" I don't recall anything that states that per se. But it would, as I stated above, seem logical. However, logical regs could be the equivalent of jumbo shrimp.

1. Realtors in our MSA area say they order TI's to protect themselves, I guess in case they don't want to handle the property??? Not really sure the reasoning here but I see it done alot in the MSA area and never in the rural areas here.

2. My thinking goes to when we have knowledge of a property address regardless of who gives it to us...but again that's the rub for me that I can see both ways. I mean if a realtor says to the LO "your borrower is going to make an offer on 100 somewhere street" today, would you say yep that's a property address???? It seems that way to me and since that was the last piece of information needed to receive to disclose then to me the 3 day clock started ticking. What do you think?

I 100% AGREE...we have stated over and over again the property is not contract driven.

3. I haven't seen anything that states that either...but then again...how many other things have I missed or missinterpreted???!!! PS...I LOVE Jumbo Shrimp and HATE regs...JS

As always thanks for the input Truff!

Interesting. Exactly what coverage does the realtor thing they're getting from a title binder that names the borrower and the bank? I don't know that we'd take TI that a realtor ordered. Thank goodness it hasn't been put to the test.

As to the realtor saying 'your borrower is going to make an offer on 100 somewhere street today' no, imo, I still don't have a property address. The borrower could NOT make the offer. The seller could reject it. Nope...I'm waiting till the borrower calls and tells me they have a property...whatever that means to them. I don't want to get caught in one of those 'he didn't have the authority to tell you anything' legal spats.

If you want truly Jumbo Shrimp you have to try the bar b que shrimp at Pascal's Manale in NOLA. AMAZING!!!

Hello - If a borrower comes in and says we are looking at properties A, B and C, do we have an application?? Or would it be when they call back and say OK we are buying B??

Thanks for any help!!

A lot has changed since this post started 12 years ago.

For TRID, the application rules are found in Regulation Z.

Official Interpretation
2(a)(3) Application.

1. In general. An application means the submission of a consumer's financial information for purposes of obtaining an extension of credit. For transactions subject to § 1026.19(e), (f), or (g) of this part, the term consists 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. This definition does not prevent a creditor from collecting whatever additional information it deems necessary in connection with the request for the extension of credit. However, once a creditor has received these six pieces of information, it has an application for purposes of the requirements of Regulation Z. A submission may be in written or electronic format and includes a written record of an oral application. The following examples for a transaction subject to § 1026.19(e), (f), or (g) are illustrative of this provision:

If you have all six elements of a TRID application, you would owe them three Loan Estimates.