With regards to the information that triggers an “application”, can we request additional information before, say the SSN, or do all six pieces of application information need to be solicited at one time? What are the exact triggers?

The exact triggers are the six pieces of listed information. But can you collect or ask for additional pieces of information? The answer is absolutely yes, you can. The Bureau has said you can ask for as much additional information as you want. Again, not documents, but information. However, you cannot refuse to accept the six pieces of information if that’s all the borrower wants to give you.

The Bureau has provided some guidance on online applications that is useful in thinking about what this means. Anybody who has filled out an online application form has had the experience where there are certain fields you have to fill out. They usually have little red asterisks next to them and, when you try to click submit or move to the next screen, it won’t let you proceed until you fill them out. Instead, the system is going to kick you back and make you fill out those fields. The way this works if this were a mortgage application — and this is guidance that the Bureau has provided — it is fine to ask the borrower for 20 pieces of information in addition to the six, but when it comes time for the borrower to move to the next screen, you cannot kick it back to them for failing to fill out any field except the six required items.

So that’s the balance you have to strike: you can engineer this process so that the overwhelming majority of time, you will be able to get this information from the borrower and you will know everything you need to know. However, there will be circumstances — whether you’ve got a borrower who’s working as a tester and is actually going to refuse to give you anything other than the six items or whatever else it might be – for which you do need to plan and build a process to be able to handle.

The question that comes up a lot: Because loan product is not one of the six pieces of information, what do you do if the borrower gives you the six things but doesn’t say if they want an ARM or a fixed, a 15 or a 30 year loan? The Bureau’s responded to that question by saying the best information reasonably available is the standard and that’s what you comply with. You are not required to give the borrower a Loan Estimate for every product that you offer, but instead it might be reasonable to say that, if your most common product is a 30 year fixed or a 5 year ARM, then in the absence of direction from the borrower about what they want, you are going to give them a Loan Estimate based on that product.

Note: This transcript has been edited from the February 2015 TRID webinar for clarity and completeness.

Answered By: Ben Olson