Compliance Blog

Written by JiJi Bahhur, Director of Regulatory Compliance

In the last TILA-RESPA blog posting, we covered the general requirements for the new Loan Estimate.  Today, I’d like to highlight the when and how the Loan Estimate should be delivered. 

General Timing Requirements:

For purposes of the Loan Estimate, there are two timeframes that the creditor should be aware of.  First, the Loan Estimate must be delivered or placed in the mail to the consumer no later than the third business day after the creditor receives the consumer’s application for a mortgage loan.

Since delivery of the Loan Estimate form is triggered by receipt of application, it is important to note the definition of application under the TILA-RESPA Integrated Mortgage Disclosures rule. The final rule defines an application to mean the submission of a consumer’s financial information for purposes of obtaining an extension of credit. Specifically, the revised definition removes the seventh “catch-all” element – “any other information deemed necessary by the loan originator” – from the current definition of application under Regulation X and consists of the following six pieces of information:

• 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.

Second, the creditor must deliver or place the Loan Disclosure in the mail not later than the seventh business day before consummation of the transaction.

The term “business day” has two different meanings for purposes of the Loan Estimate. For purposes of providing the Loan Estimate within three business days from application, the definition of “business day” is “a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.” For many credit unions, this will not include Saturdays. When calculating whether the Loan Estimate is provided at least seven business days before consummation, the term “business day” means “all calendar days except Sundays and the legal public holidays.” Unlike the first definition of “business day,” the latter definition includes Saturday as a business day.

Delivery Methods and Receipt: 

The creditor is responsible for ensuring that the Loan Estimate is received by the consumer in accordance with the timing requirements discussed above. New sections 1026.19(e)(1)(iii)-(iv) provide that if the creditor delivers the Loan Estimate to the consumer in person, it is considered received by the consumer on the day that it is provided.  If the creditor uses another method of delivery other than in-person delivery, the consumer is considered to have received the Loan Estimate three business days after it is delivered or placed in the mail.

In instances where a mortgage broker relationship is utilized, the mortgage broker may provide the Loan Estimate to the consumer on the creditor’s behalf, but it is the creditor’s responsibility to ensure that the content, delivery and timing requirements under the final rule are met.

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The next TILA-RESPA posting will discuss the good faith requirement and how it applies to the tolerance limitations prescribed by the TILA-RESPA rule.

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To all, I wish you a lovely weekend.  I intend to spend a ton of quality time with my buds this weekend since I take off for Annual Conference (AC) on Monday.  Stay cool, and if you're attending AC, come say hi!