Is a verbal intent to proceed acceptable? (Answer: Sort of)
The origination process can grind to a halt until we receive the borrower's intent to proceed (aka, a Green Light). Here's something that might speed it up:
Why do we need intent to proceed? Well, we can't even ASK a mortgage loan applicant to pay a fee (except for pulling credit) until they've received a Loan Estimate and given intent to proceed. So we struggle to get that as quickly as possible to keep the process moving along.
But when can we actually start this process? Do we need to document it? Do we need to wait until we have documentation? Could we rely on a verbal intent to proceed?
Let's jump through these issues ....
Verbal Intent to Proceed: OK
The borrower does not need to sign a form to prove intent to proceed. Intent to proceed can come from the borrower through any method permitted by the lender. An e-mail qualifies, so would a statement from the borrower to the loan officer.
There are three tricks to remember here:
Intent to proceed cannot be implied. Whether it is in writing or not, we need an express intent to proceed from the borrower
Even if we allow for verbal intent to proceed, we do need to document this somehow. This can be accomplished by having a loan officer fill out a similar intent to proceed form stating that the borrower provided them with intent to proceed
We also need to prove that the borrower received a Loan Estimate prior to giving intent to proceed. This can be accomplished simply by putting this on the intent to proceed form itself.
Loan Example
Borrower calls into a branch on Monday and says he needs a mortgage and needs to close quickly. Loan officer explains that they'll need to accept some disclosures and provide intent to proceed ... failure to do that can slow the process down. We generate an LE and initial disclosure package and place it in the mail on Monday.
Situation #1
The borrower calls on Tuesday (prior to receiving LE) and asks loan officer to speed up the process. We cannot collect a method of payment for the appraisal or other fees at this point because the borrower cannot give intent to proceed before receiving the LE.
Situation #2
Borrower calls on Thursday and claims to have received LE and initial disclosure package. Wishes to give intent to proceed and start the process, but has trouble getting signed disclosures back right away (no fax or scanner). Has already mailed them, of course the lender won't receive for several days.
In this example, intent to proceed is valid and the loan officer can go forward with getting payment for the appraisal so long as the loan officer documents that they've been given valid intent to proceed over the phone.
What to Include in Intent to Proceed Form?
I recommend using an intent to proceed form that can be filled out by either a borrower or a loan officer. You can also use the Intent to Proceed form to collect a method of payment and authorize payment and as a form to document receipt of documents including in the initial disclosure package. Good housekeeping!
Here are some ideas of things you might include:
I acknowledge receiving and reviewing the following documents prior to signing this form:
Loan Estimate Date Issued ##/##/## (date autofilled by lender)
Settlement Service Provider List
Home Loan Toolkit
- I'm sure you'll think of others to include
Note: I'm not asking them for the date they received the LE because that just complicates things. All that matters here is that it is "prior to."
By signing here I expressly provide [the lender] with my intent to proceed on this loan application.
Alternatively (for loan officer to fill out - leaving borrower section blank)
The borrower provided me with a verbal intent to proceed on [Date]. The borrower acknowledged receipt of the following documents prior to providing the intent to proceed.
Loan Estimate Date Issued ##/##/## (date auto-filled by lender)
Settlement Service Provider List
Home Loan Toolkit
I'm sure you'll think of others to include
In Other News:
How is motivational speaker Tony Robbins going to turn this into a positive? With dozens of people injured at his event while walking on hot coals ...
When's the last time you saw your community pull together to help someone in need without the prodding push of a governmental agency or ulterior motives. Nice to see these folks on the Cape coming together to help this veteran who was robbed!
***Note From John Spillane***
Peter Milewski is retiring as Director of Homeownership Lending of Mass Housing on Friday, July 1st. For over 40 years, he's been a leader to the mortgage banking industry in New England and beyond. On a personal note, Peter was instrumental as a friend and mentor in helping me establish SCA 25 years ago and the first person to recommend Ben Giumarra to me three years ago.
I can think of no better way of honoring our friend Peter than to support the cause closest to his heart, the "Carolyn Ouellette Butterfly Foundation, Inc.," in memory of Peter's daughter Carolyn.
We'd also like to invite our readers to contribute by clicking on either of these links. Please also take a moment to read "Carolyn's story" ... you will see that Carolyn and her daughter are just like Peter - always thinking of others and making a difference.
***Note from me***
Before I joined up with John years ago, I sat down with a man I hardly knew. He took me out to lunch in Boston, told me about the mortgage industry, asked me what I hoped to accomplish in life. He helped me get several interviews and to make decisions based on them. He once wrote me an e-mail explaining how I could be helpful to a company like SCA (as a lawyer with no knowledge of mortgage lending, audits, compliance, or anything else - that was a bigger deal than you might realize). To this day I have that e-mail printed out hanging behind my desk (and there's nothing else on that wall).
That man I hardly knew of course is Peter Milewksi. And it wasn't just at the start of my career that he helped me. He's been by my side every single time I've asked for help. Taking more time to spend with me than he should have. I've never done anything to help Peter (I wish I could), but I don't believe he ever expected me to. I'm excited for him. I hope that he stays involved with us; and I hope we'll be able to carry this industry forward with similar class, compassion, and vision - building on Peter's many accomplishments.
"Like the flapping wings of a butterfly, even our smallest actions can cause significant changes in the world around us."
- Butterfly Foundation Website
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