New Reg Z Rules - What is an Application?

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Question:

Relative to the new Reg Z rules, I am still a little confused as to what we are to consider an application. Will this mean they have to fill out a 1003 or could they just write down on a piece of paper the necessary items we are going to need and sign it, and that would be considered a written application?

Answer:

There is nothing magic about the form 1003 unless you want to sell mortgage loans in the secondary market. It is, however, a form that is commonly used in the industry and complies with other rules, such as Regulation B, so yes, you could theoretically get an application on a plain piece of paper, with the applicants' signatures. The focus in the Regulation Z rule, which defers to HUD's RESPA Regulation X for a definition of application, is on the information supplied in the application, not the format.

It's worthwhile to note here that the HUD definition of application will change as of 1/1/2010, to make it more definite. There would be nothing incorrect, in my opinion, in using that new definition to determine when you've received an application that triggers the early TIL disclosure requirement in Regulation Z's updated section 226.19(a).

First published on BankersOnline.com 10/05/09