TRID and Regulation B Application Requirements

Issue/Inquiry

Is there a difference between an application for the purposes of TILA-RESPA Integrated Disclosure (“TRID”) and one under Regulation B? Specifically, when does the clock start for making an underwriting decision? Is it day one of the TRID application or when the Bank receives the minimum documents it requires for an underwriting decision, regardless of what the TRID date is?

Response Summary

The APB6 requirements that define an application under the TRID rules merely establish the requirement to provide the Loan Estimate and related documents. The financial institution can still establish its application process for the purposes of Regulation B and the information it will require in order to have a completed application under those requirements. As such, the timing requirements for notification of the customer of the action taken on the loan request will be based on the receipt of a completed application under Regulation B.

Response Detail

For the purposes of the TRID rules, an application is considered complete when the following information is received:

• The consumer’s name
• The consumer’s income
• The consumer’s Social Security Number (to obtain a credit report)
• The property address
• An estimated value of the property
• The mortgage loan amount requested

This definition of an application does not mean that the lender cannot collect any other information it deems necessary for underwriting purposes. It only means that, once the lender has received the six pieces of information (i.e., “APB6”), it has an application for the purposes of satisfying the TRID requirement to provide the Loan Estimate. 12 CFR §1026.2(a)(3); Official Interpretations, 1026.2(a)(3) – 1; CFPB, TILA-RESPA Integrated Disclosure Rule, §§6.6, 6.7.

Regulation B grants a creditor latitude to establish its own application process and decide the type and amount of information it will require from credit applicants. Official Interpretations, 1002.2(f) – 1.

The commentary to Regulation Z acknowledges this, stating that its definition of “application” does not prevent a creditor from collecting whatever additional information it deems necessary in connection with the request for the extension of credit. However, once a creditor has received these six pieces of information, it has an application for TRID purposes. Official Interpretations, 1026.2(a)(3)(ii) – 1.

Under Regulation B, when a creditor has obtained all the information it normally considers in making a credit decision, the application is complete and the creditor generally has 30 days from that date in which to notify the applicant of the credit decision. Official Interpretations, 1002.9(a)(1) – 1.

Regulation B defines an “application” as follows:

The term “procedures” means the actual practices followed by the creditor as well as its stated application procedures. If a creditor has a policy stating that it accepts only written applications but, in practice, it accepts both written and oral applications, then its procedures are to accept both written and oral applications. Official Interpretations, 1002.2(f) – 2.

This means that the Bank can require additional information or the satisfaction of other conditions for the approval of the loan applied for, even if the applicant has already provided the APB6 information and an acknowledged intent to proceed. The timing requirements for notification of the action taken on the loan request will be based on the receipt of a completed application, for the purposes of Regulation B, regardless of the date of receipt of the APB6 information.

This entry was posted on Monday, December 17th, 2018 at 6:00 am.