RESPA Disclosures Given BEFORE Application

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Question:

With respect to a real estate loan, we have a Loan Officer who completed and mailed the RESPA Disclosures prior to application date. They think they should not have to mail out any additional RESPA disclosures after we received the application because they had already been given. I question how they knew what figures to use since there was no application giving them the needed information.

Answer:

RESPA disclosures are not triggered until there is an application. I'm going to assume that the loan officer had a verbal application, upon which the loan officer supplied the disclosures. Then the loan officer required a written application. Nothing is wrong with this as disclosures were provided, but it informs me that the loan officer doesn't really understand Regulation B's definition of an application. Next, it makes me wonder if the loan officer ever takes verbal applications and doesn't send disclosures (or an Adverse Action Notice) because the loan officer doesn't consider the application as received yet.

I recommend that you provide training on inquiries, applications, prequalifications and preapprovals. This would be a good place to start.

First published on BankersOnline.com 01/19/04