Do we have a TRID "application" if we have some information already on file?
Every Wednesday we try to do our (small) part to help quiet the amount of confusion surrounding regulatory issues in banking. Here's an issue that came up this week and just a simple statement of what we believe the answer to be.
We all know that we have an obligation to disclose the Loan Estimate now within three days of receiving 6 pieces of information: Name, Income, Social Security Number, Loan Amount Sought, Property Address, and the Estimated Value of the Property.
But we should also know is that there's no regulatory requirement to collect all 6 pieces the first time we have a conversation with a potential borrower. So, for example, if we're working with a borrower and haven't asked for a Social Security Number yet, then we have no obligation to deliver a Loan Estimate because we have no "application." In other words (those of the CFPB), TRID permits "sequencing" or the "strategic collection" of information.
But what if a borrower hasn't submitted this specific piece of information to you in this transaction, but you have it as part of a prior transaction?
Let's keep using our Social Security Number example ... So we're working with a borrower on a refinance and have gotten a lot of information from him. But we still don't have the Social Security Number. First of all, that's okay -- TRID allows us to collect the 6 pieces in "sequence", we don't have to do it all on the same day. And we might very well be quite happy with this! (What if the borrower hasn't identified a loan product? Do you want to disclose the Loan Estimate without knowing which product the borrower is interested in?)
So the borrower hasn't given you his Social Security Number ... but does this matter if he has accounts with the bank and you originated his existing mortgage 4 years ago? You obviously have reasonable access to his Social Security Number, right?
No. You're safe. In this example, you do not have an "application" (triggering your obligation to disclose) until the borrower submits his Social Security Number to you. An application means the submission of the 6 pieces of information, not an originator happening to know all 6 pieces.
This is a quote from the CFPB in its August 26, 2014 webinar (full transcript available here):
"In our view, a creditor having information on file from a previous or existing loan, or loan application, does not mean that a new application has been submitted. This would hold true if the consumer contacts the creditor and expresses an interest in applying for a refinance or a new loan and the six pieces of information that we have deemed an application exists on the creditor's system or on file."
Another interesting quote from this webinar (although slightly off topic) is this:
TRID "provide[s] creditors a great deal of flexibility in terms of collecting additional information at or before the time the creditor collects the six elements of an application, including the ability to sequence or strategically collect information .... This may commonly include saving a specific piece of information, such as the consumer's social security number, for last."
We just wanted to highlight this, as interpreting the new TRID rules too strictly may lead to premature applications (or "leads", not applications) clogging up your process.
In other news:
Did you see where the U.S. Coast Guard seized almost $2 billion in drugs recently?
But it wasn't all roses this week for the Feds, the EPA spilled about 3 million gallons of toxic waste into a Colorado river, turning it orange!
Check out the planned construction in Littleton, MA, coming soon with $27 million in financing from Rockland Trust.
Some of the biggest news in New England compliance circles this week- Steve Antonakes (very recently #2 at the CFPB) taking one of the top positions with New England's Eastern Bank.
"Patience is a virtue." We've all heard that a million times. Sometimes I say, enough with patience, let's just get this project done!! But often you find that old sayings are old sayings for a reason. I overheard someone explain recently how an impatient person can negatively affect others in some cases. The person explained that impatient people tend to rush other people, to finish their sentences, and to interrupt them if given the opportunity. The problem with that is how the other person reacts- they try to hurry, get frustrated, and are more likely to stumble over words. What does that lead to? Probably taking more time to finish the conversation anyway (and certainly less value coming out of it). The lesson? If you tend to be impatient, you may want to at least be careful when talking with colleagues, to give them time to finish sentences.
"The key to everything is patience. You get the chicken by hatching the egg, not by smashing it."
- Arnold Glasgow
Thanks so much for reading our weekly newsletters. We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy. Your calls and e-mails are very helpful - please keep contributing.
**These are our opinions. We're not authorized, or willing, to express those of others.**