Chapter 9 — Key Takeaways

One page. If you remember nothing else from this chapter, remember the box at the top.

THE SIX ITEMS — memorize these verbatim

Under the TILA-RESPA rule, an application consists of the submission of:

  1.  The consumer's NAME
  2.  The consumer's INCOME
  3.  The consumer's SOCIAL SECURITY NUMBER   (to obtain a credit report)
  4.  The PROPERTY ADDRESS
  5.  An ESTIMATE OF THE VALUE OF THE PROPERTY
  6.  The MORTGAGE LOAN AMOUNT SOUGHT

  Six words to hang it on:  NAME · INCOME · NUMBER · ADDRESS · VALUE · AMOUNT

When a creditor has all six, an application exists. No form, no signature, no fee, no contract, and nobody's intention is required — not the borrower's and not yours.

THE THREE-BUSINESS-DAY RULE

The Loan Estimate must be delivered or placed in the mail no later than the third business day after the creditor receives the application.

  • The standard is deliver or mail, not "the consumer receives."
  • The general definition of business day governs this deadline: a day the creditor's offices are open to the public for substantially all business functions.
  • The specific definition — all calendar days except Sundays and federal legal public holidays, so Saturday counts — governs waiting periods, the mailing presumption, and rescission.
  • The pre-TRID seventh item ("any other information deemed necessary by the loan originator") was removed. A creditor's own policy cannot postpone the trigger.
  • The same event starts several clocks: the Loan Estimate, the settlement-cost booklet, the servicing disclosure, the appraisal-copy notice, and the counseling list.

The property address is the trip wire. You usually already hold the other five. Write pre-approval letters to a maximum purchase price, not to a house.

The declarations that actually matter

Declaration Why it bites on day 40
Occupancy Drives pricing, down payment, and eligibility; misrepresenting it is fraud, not a technicality
Ownership interest in the last 3 years Sets first-time-buyer status; asks about a deed, not a mortgage
Family or business relationship with the seller Non-arm's-length rules, extra documentation, price scrutiny
Borrowed money not disclosed Family money is borrowing; it changes DTI and it is what large-deposit review is hunting
New credit on or before closing A promise about the next fifty days, not a one-time question. This is the furniture
Co-signer or guarantor Counts against the borrower unless 12 months of payments by another party are documented
Judgments · federal debt · lawsuits The lawsuit question is the one nobody checks and nobody volunteers
Foreclosure · short sale · deed in lieu · bankruptcy Seasoning periods; ask them as a group, and say a "yes" is workable

Read them out loud, one at a time, and wait for each answer. Three extra minutes on day 5.

The habits

  1. One document list, sent the day you take the application, complete for that borrower's income type, with a deadline and a reason attached to each item. A list without a date is a suggestion.
  2. Ask income in components, never as a total. Base, overtime, bonus, commission — separately.
  3. Reconcile before you run anything. The 1003 against the credit report, the contract, and the paystub. Twenty minutes. It is the cheapest work in the whole file.
  4. Copy and paste addresses. Never retype one.
  5. Never let a borrower email you a paystub. Portal only.
  6. When a borrower goes quiet, change the channel and lower the ask to one item.
  7. Resolve every application. Withdrawn comes from the borrower. Denied comes with a notice and reasons within 30 days. Incomplete comes with a notice naming what is missing. Nothing drifts.
  8. Never discourage an application. If they want to apply, take it, work it honestly, and let the decision be a decision with a notice attached.

The number to remember

A \$150 a month income mis-key — commission taken from one year instead of two — hides 0.60 percentage points of debt-to-income (42.06% keyed versus 42.66% actual on the Linden Street file) and tells a first-time buyer they can shop \$67.50 a month higher than they can.

Errors that make a file look better are the expensive ones, because nobody investigates good news.

Key terms

URLA / Form 1003 · application trigger (the six items) · Loan Estimate (LE) · TRID clock · intent to proceed · initial disclosure package · borrower authorization · e-consent · application date · declarations

Monday morning

By the end of your first day back you should be able to:

  • Say the six items from memory, in any order, without looking
  • Look at your last five files and state, for each, the date the sixth item arrived and whether it matches the application date in your system
  • Open your pre-approval letter template and confirm it is written to a maximum purchase price with no property named — and change it if it is not
  • Rewrite your document request email so that it is one message, grouped by borrower, with a deadline and a reason on at least half the items
  • Read the declarations out loud on your next application, one question at a time, and time how long it actually takes
  • Run the twenty-minute reconciliation on the next file you take, before you run findings

Requirements change and state law varies. Verify everything on this card with your compliance department and your regulator before you rely on it.