Author: Cathy Guinn, Mortgage Licensing Instructor
Let’s talk about ALIENS and the mortgage Loan Estimate. No, I’m not talking about aliens from outer space. I’m talking about the kind used to identify whether we have a completed mortgage loan application.
Why does that matter? Identifying whether you have a completed application is going to determine when to start the TRID clock for delivery of the Loan Estimate (LE). And starting the TRID clock counts because you need to be in compliance with the delivery of the Loan Estimate. In fact, if you don’t deliver the LE on time, you can be facing fines up to $1 million dollars. Yikes!
So, let’s take a look at the six criteria that make up the completed mortgage loan application.
- A – Address of the subject property
- L – Loan amount requested
- I – Income of applicant
- E – Estimated value of mortgage loan application
- N – Names of borrowers
- S – Social Security Number
There is your acronym – ALIENS. And only when you have ALIENS do you have a completed mortgage loan application.
So what happens if you have an applicant that is missing the address of the subject property? Well, you don’t have a completed application (ALIENS). Should you give them the mortgage Loan Estimate anyway? No, in this case, you’re going to provide an unofficial estimate of closing costs. Under TRID rules, the unofficial estimate cannot resemble the official one, must contain specific verbiage in 12-point font and should clearly point out that the actual rate, payment and costs could be higher. It should also direct the borrower to get an official Loan Estimate before choosing a loan.
So, you provide an unofficial estimate, and they shop around and find a house. Three weeks later they provide a contract and intent to proceed with a loan. Can you collect an appraisal fee? An application fee? Not yet as you have only issued an unofficial estimate.
What is the only fee you are permitted to collect from the applicant prior to giving the official Loan Estimate and receiving the borrower’s intent to proceed? That fee is the bona fide credit report fee.
What about the timing of the delivery requirements of the Loan Estimate? The law states that the Loan Estimate is due within three business days of a completed application (that’s ALIENS!) via email, postmark or hand delivery. But what’s a business day? Does Saturday count? The law says a business day is any day that the creditor is open to the public to carry out substantially all of its business activities. A receptionist going in to answer phones or a loan officer catching up on the week’s work would not constitute a business day if those are the only activities being performed. Business day definition will depend on your individual company policy.
Cathy Guinn possesses two of the most sought-after qualities in a mortgage education instructor – solid mortgage background and extensive teaching experience. Cathy’s solid 30 years of experience serving in the mortgage and real estate industry includes positions as a real estate manager, account executive, insurance agent, and notary closer.
Her experience includes owning and managing a small training company in which she wrote and conducted mortgage lender training for new and experienced loan officers. These positions put Cathy in an ideal situation to prepare new mortgage professionals for successful careers and to inform experienced mortgage professionals of new and changing legislation and developments.
Cathy is currently a licensed mortgage loan originator in Florida, where she resides.