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Please clarify Borrower Needs to sign application within 3 days

I have a loan officer arguing the fact that the borrower can sign the applicatin any length of time from the date the applciation was created. Does any body know which RESPA law it is or where I can find the law stating this?

Thank you,


by Dattilo MTG July 6, 2007 12:00 AM


72 hours after credit works well,

Fire the LO or laugh at him/her



by Informedisback July 6, 2007 12:00 AM


This has nothing to do with Respa, and you don´t HAVE a valid application until the borrower signs it, so there is no ´time´ to calculate, and the fact that you don´t know this is scary as hell......

I understand Verizon is hiring...I´m just sayin´.
:-(


by Post Tenebras, Lux! July 6, 2007 12:00 AM


PTL Perhaps you are the one that doesn´t know what he is talking about.....No need for such negativity. Each state is different...Here in Florida you are required by law to have a signed application with the three day taime frame....
by marie3328 July 6, 2007 12:00 AM


I should have been more celar. The LO´s in out office do not get paid untill their file is COMPLETELY COMPLIANT. his borrower signed the application and disclosures 1 month after the date the app was created. In order for him to get paid and in order for us to have a compliant file we need the borrower to resign his application and have it dated with a date no later than 3 days from the date the application was created. The created date is on the GFE, TILL and some of the disclosures.

I was asking the vine to get the actual regulation that states what I know to be a regulation. Needing the signatures to be dated within 3 days of the creation date)

Tenebra the question was not, does it need to be signed or not? the question was does anybody know where I can get the regulation source to back the three day time limit.

also Tenebra you can have a valid application without the borrowers signatures of the borrower. page 4 of the 1003 you need to have it checked as a telephone application. This would be enough for use to move the file through underwriting and for most lenders they would be fine on funding it. But when it is time to get paid our LO needs to have had a app sent out to the borrower and we would have needed signatures dated within the 3 day period after it was created in order for him or her to get paid.

So once again does anybody know where to find that regulation?


by Dattilo MTG July 6, 2007 12:00 AM


Oops I meant I should have been more "CLEAR" not "celar".

Exactly marrie3328. Same her in AZ. Do you know where to find that LAW.

I am trying to push the issue with the lo because he even called his own employer and they confirmed his side "the app can be signed anytime after it´s creation date....."

I was a bit shocked.
by Dattilo MTG July 6, 2007 12:00 AM


Did you try www.hud.gov?
by marie3328 July 6, 2007 12:00 AM


Have y´all thought about Reg Z....?

TILA


Easy searches





Teacher.....where are you?


by Informedisback July 6, 2007 12:00 AM


Excellent call informedisback....www.fdic.gov
by marie3328 July 6, 2007 12:00 AM


You have to have them sent out within 3 days, not signed within 3 days. Pay your loan officer and stop being so difficult. Imagine how demoralized this loan officer must be. Don´t be surprised when he bolts your shop.
by Uhhhhdel July 6, 2007 12:00 AM


if it is a purchase, the clock doesnt start ticking on sending them out until they have a signed OTP.
by Uhhhhdel July 6, 2007 12:00 AM


Uhhhhdel,

If you had a shop and you were audited and had continual violations from the Banking department and all your LOS have to leave becasue you ran a loose ship and it sunk. I think that is a bit worse than having one disgruntal lo. Your call though. You must be in a state to where that is not a law.

Also the LO is not demoralized he is just happy to be working here illegaly making pennys on every app. I picked him up from the Home Depot last week and he is just rocken out the apps. If he doesn´t get these signatures I am taking him back to Home Depot.
(JJ)
by Dattilo MTG July 6, 2007 12:00 AM


Let me know when you drop him off I am looking for a bew landscaper!
by Mills Lane July 6, 2007 12:00 AM


make that a "new" landscaper. fingers working faster than brain today.
by Mills Lane July 6, 2007 12:00 AM



There is no requirement that the orignial loan applications be signed. The only requirement is that the TIL and GFE be sent to the borrower within 3 business days of making an application for credit, which can be done by phone. The LO just checks the box on the back of the application take by phone.
The TIL and GFE don´t require signature just proof that you sent them.
by WhoKnew July 6, 2007 12:00 AM


There is no legal requirement for an application to be signed, ever. Think about it this way. What would you do if a client refused to sign within 3 days? Does that mean that you can not possibly be in compliance? Does that mean that the client has broken a law? Would some enforcement agency step in to force one of you to comply with the law or face the conquences? I think you are confusing the requirement for a lender to produce disclosures within 3 days of application. That means produce and present to the applicant. You can produce them in person or you can mail them within 3 days. They do not have to receive them by mail within 3 days as long as you can show that they were postmarked within 3 days. Whether you present them in person or by mail, the applicant is never required to sign them. It´s nice if they do sign as it makes it easier for you to prove that you met the 3 day requirement but still not required.

If you are requiring your LO to have a new application signed reflecting a date that is not true, then you are asking him to commit loan fraud. I would recommend that you stop suggesting that.

Regarding your point that the only way an application may move forward is by checking telephone application, that is wrong also. If you take a face to face application, then you check face to face. After taking a face to face application, if your client decides he doesn´t want to sign, takes the application home with him, signs it 10 days later and returns it to you, then that is OK and legal as long as you can prove that you made all required disclosures at the time of application or within 3 days of application.

You stated "LO in our office". I hope that means that he works beside you and not for you. If he does work for you, you should apoligize and be thankful that you are smart enough to high people who are smarter than you. That was not a slam, that was technique used repeatedly by Henry Ford. If he does work for you, it may not be a bad idea for you to sneak away for a little refresher training. Actually knowing what you are doing will make it easier for you to keep your good people. Have a great weekend.
by swamp_farmer July 6, 2007 12:00 AM


I have sat throught several annual audits with the California Dept of Corporations and their take is disclosures must be put in transit within 72 hours of the credit report or signed application whichever comes first.We did face to face, and sometimes didn´t see the customer for 7 days after credit was run. As long as the intial disclosures went out within 3 days of credit, they didn´t care what date the customet signed the app. 7 days later. But that´s the just the DOC take on it. Not sure what other states requirements are. I would take a citation before I would ever ask a borrower to back date something.
by spwspwc July 7, 2007 12:00 AM


Thank you for all your input. I am not holding his check. It is a new submission that has not been submitted yet. The application came in to be submitted with a signed date 2 months later than the creation date. If we submitt this loan to a bank and it funds and we try to get paid on it our corporate office will not pay on it untill it has the signatures within the three day period. That is how I was trained and I thought that was the correct way. I am just his team leader and It is good for me to be getting everybodies input. It appears even my corporate office may be unclear.

Once again. This was just a new submission with a date 2 months old from it´s creation date. I was mearly suggesting he update the application and get new signatures then at that point we would move it out to a lender. That´s all.

Thank you all for your input.

sampfarmer, do you have the source of your information: "You can produce them in person or you can mail them within 3 days. They do not have to receive them by mail within 3 days as long as you can show that they were postmarked within 3 days. Whether you present them in person or by mail, the applicant is never required to sign them. Itīs nice if they do sign as it makes it easier for you to prove that you met the 3 day requirement but still not required. "

I would like to print it up and take it to corp?


by Dattilo MTG July 7, 2007 12:00 AM


Dattilo MTG,

It appears to me that your confusion lies in the difference between application and disclosures. Reg Z and RESPA have clearly defined regulations requiring specific disclosures that, if not provided at application, are to be mailed to the applicant within three days of application. Reg Z and RESPA do have a definition of an application. That definition does not address whether the application must be signed by the applicant within three days or ever. Therefore you are not going to find something that explicitly says that they don´t.

There are regulations that require home loans, at least certain types, to be in writing. But they don´t have to be signed by the applicant. For example the staff interpretations for Reg B say that the responsibility for completing the written application rests with the lender.

"Regulation B does not, however, require that the applicant complete a written application. Rather, the responsibility rests with the lender. Even if the applicant does not fill out a written application, the lender can complete an application on behalf of the applicant to comply with Regulation B. The Regulation B staff interpretations state that:"

"The requirement of written applications for certain types of dwelling-related loans is intended to assist the federal supervisory agencies in monitoring compliance with the ECOA and the Fair Housing Act…. The creditor may complete the application on behalf of an applicant and need not require the applicant to sign the application."

See page six: Click Here

So, when is an app an app? First off the definition of an application depends on which law or regulation you have in mind. For example:

"I have several conversations a day where Iīm just talking to people, getting some info and telling them they donīt qualify---no app taken."

Actually an app was taken, for purposes of Reg B. And to show compliance with Reg B you are required to have a written record of it.

REG B:

The definition of application for purposes of the implementation of Reg B does NOT require a property. It may not even require a written application to come into play. If a consumer contacts a creditor, and a mortgage broker does qualify as a creditor in this instance, and the creditor communicates to the consumer that they do not qualify for a loan, then the creditor is obligated to provide the consumer an adverse action notice. For example, someone calls a mortgage broker and says, "Iīd like to buy a house, but I am currently in bankruptcy and my house is being foreclosed upon. Can I get a loan?" If the broker says, "No, you wouldnīt qualify until at least your bankruptcy is discharged," the broker now owes that consumer an adverse action. The broker received enough information to make a credit decision and communicated that decision to the consumer.

Here is a booklet from the FDIC that is a good reference for when does an inquiry turn into an application within the context of Reg B:

Click Here

FACTA:

For purposes of complying with the FACTA disclosure requirements, most compliance experts say that creditors should use the Reg B definition of application. So if you pull a credit report that includes credit scores on someone for the purpose of prequalifying them or preapproving them for a home loan, even if they have not identified a property, you should provide them with a FACTA disclosure notifying them of their credit scores and the factors affecting their scores.

RESPA & REG Z:

Whether there is an application for purposes of RESPA and Reg Z are different. The RESPA and TIL definition of application includes the identification of a specific property. So for example, the GFE disclosure required under RESPA and the TIL disclosure required under Reg Z are not required to be provided until the customer applies for a loan on a specific property. So an application to refinance is always an application under RESPA and Reg Z. Requests for preapproval or prequalifications to purchase a home before the specific home is identified are not applications under RESPA and Reg Z.

1003 APPLICATION DATE

As far as dating 1003s -- you, the originator, date them when they are received, no matter the delivery method. If you meet the customer in person, itīs dated the date you meet and they sign. By phone, the loan officer dates it the date they take the app by phone. It doesnīt matter if, or even whether, the applicant signs or dates the 1003. If received by fax or computer, again the originator should date them the date received. This date has NOTHING to do with whether credit is pulled. (The date credit is pulled does have to do with this date though.) When it comes to RESPA and TIL disclosures, the date on the 1003 is how you show you are in compliance (or not). As we all know, these disclosures are required to be sent within three business days from the date of application unless the loan is denied and an adverse action is sent within the three days. Applications without a property are not applications for the purposes of RESPA and Reg Z disclosures. When a property is identified then the three day clock starts ticking. The way you can handle this is for the originator or processor to note the date of the receipt of a contract at the bottom of page three of the 1003 near the originatorīs signature for applications for prequals that didn´t have a property in mind at application. This way an auditor or lender knows what date on which to base the RESPA & TIL disclosure requirements. These disclosures can be sent based on the receipt of the 1003 without a property, but the addition of a property requires that disclosures specific to the property be sent within three business of the identification of that property by the lender or broker regardless of whether disclosures were sent before a property was identified.

CREDIT REPORTS & APP DATE:

Why the date of a credit report matters. Say I am an auditor auditing a shop that does primarily refis and takes apps mostly by phone. I notice that almost all of the "applications" are dated sometimes days after the date of the credit report. Itīs obvious that the apps are not being dated the date of application and the RESPA and TIL disclosures are not being sent out within the required time-frame. Why would a broker or lender order a credit report on someone that hadnīt applied for a loan? That in itself would be cause for alarm if true. And since these are refinances there is a property in mind from day one, the subject property. So the date of the credit report indicates that an application was taken on a specific property on or before the date of the credit report and the RESPA & TIL disclosures were not provided within the required three business days. So some compliance departments require that if you have a credit report you better have an application dated* on or before that date, and if there is a specific property the required disclosures better be sent in time.

(* Note: not signed and dated by the applicant, signed and dated by the interviewer)

STATE REGULATIONS

Each State may have regulations that differ from the Federal regs.

So Dattilo MTG, you didn´t specify whether this was a purchase or refinance. If it was a purchase with a property in mind or if it was a refinance (all refis have a property), what is important is that you have documentation that the RESPA, Reg Z and any other disclosures were given or mailed to the applicant within three days. If this was a pre-qualification (no property) then there was no application for purposes of RESPA or Reg Z and those disclosures were not required.

Either way here´s what I would do. The inquiry or application that is 60 days old should be canceled as incomplete. It should have been canceled 30 days ago since apparently the applicants were uncertain about proceeding. If required disclosures were not made, notes should be put into the file about why not, and what has been done to correct the problem so it won´t happen again. Now that the customer has decided to proceed with an application, a new file should be opened with a new application and all the appropriate disclosures.

Hope this helps.

Merlot
by Merlot July 7, 2007 12:00 AM


The best Grapevine advice I can ever offer is this:

"If it´s said by Merlot, then it must be so."






Write it down, stick it in your mouth, chew vigorously and swallow.

There´ll be a test on Monday. :)
by Mac July 7, 2007 12:00 AM


I was going to jump in before I read the entire thread but no need. You should all cut and paste Merlots post and stick it on your walls in 24 point type.
by JustplainMarvin July 7, 2007 12:00 AM


Datillo, I congratulate you for honestly seeking advice that will help you conduct business the right way without getting your feelings hurt or lashing out at those who respond. My hat is off to you. The more I learn about this industry, the more I realize that I have even more to learn. This is the type of information exchange that I enjoy most from the Grapevine. I agree completely with Merlot´s explanation and commend him for taking the time to break this down. He covered a wealth of knowledge in his post. I think we would all be wise to copy it for future reference. Have a great weekend.
by swamp_farmer July 7, 2007 12:00 AM


Thanks Mac, JPM and sf. This is about the third time that I´ve posted that. The app date question just seems to keep coming up so I just cut and paste it as necessary. It just consolidates what several of the posters were already saying.

Merlot

by Merlot July 9, 2007 12:00 AM


I just got into the office and remembered I posted this thread last week. I am pleasantly surprised that there was a few more great responses.

Thank you Merlot for taking the time and giving me your input. It will help out alot.

And thank you all who responded. This was great. In some circumstances people are confined to their office and the knowledge in their offices. To reach out to the grapevine and post a thread here and be able to get other opinions and sources is outstanding. You guys and gals ROCK!!!




by Dattilo MTG July 9, 2007 12:00 AM


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