Frequently Asked Questions

Know Before You Owe (KBYO or TRID)

Categories:

Loan Estimate – Intent to Proceed

No, this is applicable today under Regulation X.

One time. There is no requirement to obtain evidence of a consumer’s intent to proceed for each Loan Estimate issued, only after issuance of the initial Loan Estimate.

Yes. Commentary to rule provides that the consumer must have received the disclosures required under §1026.19(e)(1)(i), and indicated an intent to proceed with the transaction described by those disclosures before paying or incurring any other fee (other than a credit report fee) imposed by a creditor or other person in connection with the consumer's application for a mortgage loan. Even if the consumer is only paying such costs at closing or the loan is a “no-cost” loan the fee is being “incurred” regardless of when it is actually paid.

From the preamble under the rule: “With respect to the request that the Loan Estimate contain a signature line that could be signed by the consumer to indicate the consumer’s intent to proceed, the Bureau believes that allowing the Loan Estimate to be signed by the consumer to document the consumer’s intent to proceed is contradictory to the intent of TILA section 128(2)(B)(i). This section of TILA, implemented in this final rule in §1026.37(n)(1), provides that consumers are not required to proceed with the transaction merely because they have received the Loan Estimate or signed a loan application. Specifically, form H-24 of appendix H to Regulation Z, which illustrates the optional signature line permitted on the Loan Estimate under §1026.37(n)(1), states that the consumer’s signature only documents receipt of the Loan Estimate.”

Except for obtaining a credit report, neither a creditor nor any other person may impose a fee on a consumer in connection with the consumer's application for a mortgage transaction before the consumer has received the loan estimate and indicated to the creditor their intent to proceed with the transaction described by those disclosures. Commentary also indicates: “A creditor or other person may not impose any fee, such as for an application, appraisal, or underwriting, until the consumer has received the disclosures required by §1026.19(e)(1)(i) and indicated an intent to proceed with the transaction."

In any manner the consumer chooses, unless a particular manner is required by the creditor. The creditor must document this communication to satisfy the record keeping requirements of §1026.25. For example, oral communication in person immediately upon delivery of the Loan Estimate is sufficiently indicative of intent. Oral communication over the phone, written communication via email, or signing a pre-printed form are also sufficiently indicative of intent if they occur after receipt of the Loan Estimate. A consumer’s silence is not indicative of intent.

The expiration date regarding the closing costs reflected in the Loan Estimate is for the initial delivery. Intent to proceed is only required once and not for subsequent revised Loan Estimates, therefore there is no mandate for changing the initial closing cost expiration date. Commentary to the rule indicates: “Expiration date. The disclosure required by §1026.37(a)(13)(ii) related to estimated closing costs is required regardless of whether the interest rate is locked for a specific period of time or whether the terms and costs are otherwise accepted or extended.”

No, the consumer cannot indicate intent to proceed until after receipt of the Loan Estimate. Otherwise, there is nothing in which to base the intent to proceed. This is also stated under the provisions regarding collection of fees. A fee cannot be imposed (other than a credit report fee) before the consumer has received the Loan Estimate AND indicated an intent to proceed with the transaction described by that Loan Estimate.

No. The optional signature lines are for confirming receipt of the disclosure not for indicating intent to proceed with the transaction (see the next question also).



Disclaimer: The following information is intended for general information purposes with the goal of assisting ICE Mortgage Technology’s customers in complying with the new KBYO regulations. This information is provided as a courtesy to ICE Mortgage Technology’s customers and ICE Mortgage Technology makes no representation or warranty regarding the accuracy of the information set forth herein, and you may not rely on this information to ensure your company’s compliance with the KBYO regulations. This FAQ should not be construed as legal advice or opinion on any specific facts or circumstances, including the application of the KBYO regulations. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with all applicable laws and regulations.