By: Amanda McMurtrey
Application is defined in 12 CFR 1026.2(a)(3) as:
“Application means the submission of a consumer’s financial information for the purpose of obtaining an extension of credit. “
The rule provides that the submission may be in written or electronic format and includes a written record of an oral application.
According to the old rule, an application is considered received when the consumer provides the following information to the creditor:
- Consumer’s name,
- Consumer’s income,
- Consumers social security number to obtain a credit report,
- Address of the property,
- Estimate of the value of the property,
- The mortgage loan amount sought, and
- Any other information deemed necessary by the loan originator.
The new rule’s definition has removed the “catch all” provision and an application is now considered received when the consumer provides the following information to the creditor:
- Consumer’s name,
- Consumer’s income,
- Consumer’s social security number to obtain a credit report,
- Address of the property,
- Estimate of the value of the property, and
- The mortgage loan amount sought.
Once a creditor has received the 6 pieces of information, it has an application for purpose of the requirements of Regulation Z.
Under the final rule, receipt of an application triggers a creditor’s obligation to provide the Loan Estimate within three business days.
The new definition of application does not prevent loan originators from requesting and obtaining other information necessary to provide a reliable estimate. Doing so, however, does not affect when the three-business-day period begins.
If the consumer had filled out and saved a mortgage application online, but has not officially submitted it, the creditor is not required to provide a Loan Estimate. If within the three-business-day period the consumer withdraw the application or the creditor determines they cannot approve it, the creditor is not required to provide the Loan Estimate.