Frequently Asked Questions

Know Before You Owe (KBYO or TRID)


Loan Estimate – Miscellaneous Questions

Yes, both disclosures can be provided in electronic form subject to compliance with E-Sign provisions; however, there is no regulatory requirement that either the Loan Estimate or the Closing Disclosure must actually contain a signature (optional), but a signature may be required by a specific program or investor. You should seek policy guidance for compliance with your compliance expert or attorney.

It’s not recommended for a creditor to accept a Loan Estimate disclosing a different creditor since the creditor is ultimately responsible for the accuracy of the Loan Estimate if issued by a mortgage broker. If the creditor is unknown at the time a mortgage broker may provide the Loan Estimate then Regulation Z provides that the creditor’s name should be left blank.

It depends on whether your policies are to collect these fees on the bridge loan financing or on the permanent financing.

Commentary ¶37-1 states, “The disclosures required by §1026.37 are required to reflect the terms of the legal obligation between the parties, and if any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure in good faith, based on the best information reasonably available to the creditor pursuant to §§1026.17(c) and 1026.19(e). See comments 17(c)(1)– 1, 17(c)(2)(i)–1 and –2, and 19(e)(1)(i)– 1. Where a disclosure is not applicable to a particular transaction, unless otherwise provided by §1026.37, form H–24 of appendix H to this part may not be modified to delete the disclosure from form H–24, or to state ‘‘not applicable’’ or ‘‘N/A’’ in place of such disclosure. The portion of the form pertaining to the inapplicable disclosure may be left blank, unless otherwise provided by §1026.37. For example, in a transaction for which the consumer does not pay points to the creditor to reduce the interest rate, the amounts required to be disclosed by §1026.37(f)(1)(i) may be left blank on form H–24. As provided in §1026.37(i) and (j), however, the adjustable payment and adjustable interest rate tables required by those paragraphs may be included only if those disclosures are applicable to the transaction and otherwise must be excluded.”

There are two assumptions made regarding this question: 1) the intent of the question regarding "multiple Loan Estimates" was assumed to mean an initial Loan Estimate and subsequent revised Loan Estimates issued (rather than multiple Loan Estimates issued at the time of initial disclosure); and, 2) "which one is chosen" was assumed to mean the consumer provided intent to proceed. That being the case, there is no mandate to document intent to proceed regarding subsequent revised Loan Estimates, but yes, you should always document the intent to proceed based on the Loan Estimate initially issued, in retainable form and in a manner that can be reproduced for examination, auditing and record retention purposes.

There is also no prohibition on obtaining subsequent intent to proceed by the consumer, but there is no requirement to do so. In such a case though, you should not erase or remove the original intent to proceed since proceeding with the loan request, requesting documentation from the consumer, and the imposition of fees is contingent upon the intent to proceed initially provided.

In a standard wholesale transaction in which the wholesale lender is the creditor, there is no substantive difference between the issuance of the Good Faith Estimate (GFE) and Truth in Lending Statement (TIL) versus the Loan Estimate in terms of timing of issuance and receipt by the consumer, or the obligation regarding accuracy on the part of the creditor for compliance of the disclosure (except a difference in language presently regarding whether the GFE if issued is binding, if accepted by the creditor). In accordance with the question, creditor name is required on the existing GFE and TIL; however, required disclosure of the loan number and its associated requirements is an addition under the new rule.

It would depend on whether the counter-offer was initiated by a subsequent request by the borrower or other valid change of circumstance affecting eligibility, or whether you as the creditor are unwilling to approve the loan on the terms originally applied for.

<You should follow established policies within your organization regarding how to treat the original loan request under adverse action requirements, but it would be prudent to provide adverse action and originate a new application for the brokered product if the counter-offer is based on the creditor’s unwillingness to approve the loan on the original terms requested. Commentary ¶19(e)(1)(iii)-3 provides the following "If the creditor fails to provide early disclosures and the transaction is later consummated on the terms originally applied for, then the creditor does not comply with §1026.19(e)(1)(i). If, however, the consumer amends the application because of the creditor’s unwillingness to approve it on the terms originally applied for, no violation occurs for not providing disclosures based on those original terms. But the amended application is a new application subject to §1026.19(e)(1)(i)."

There are a few issues to consider here: 1) E-Sign responsibilities under 15 USC 7001(c) consumer consent specifically applies to disclosures provided via electronic format and does not indicate an alternative disclosure method for subsequent disclosures provided via other means after consent has been received (other than the consumer rescinding the consent to receive disclosures electronically in which paper or other non-electric versions must be provided, or changes to your hardware or software prohibits access to retain the disclosure in which case the consumer would receive information on the updated hardware or software requirements); 2) concerns regarding privacy under Regulation P relative to protection of the consumer’s non-public personal information; and 3) state laws relative to privacy and security breaches.

Therefore, it would not be recommended to email disclosures to a consumer, nor receive disclosures back from the consumer, unless via an E-SIGN compliant solution, and/or particularly if the disclosures in question contain non-public personal information.

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.