Loans

Lesson: The Loan Estimate

The Loan Estimate Form.

The Loan Estimate form integrated and replaced the initial TILA disclosure form and the RESPA GFE form. Here are the main points you need to know about the Loan Estimate form:

• It should be provided to the consumer within three business days after submitting a mortgage loan application.
• It discloses mortgage loan specifics, such as key features, costs, and risks.

Here are some fine points to know about the Loan Estimate form:

Provision by mortgage broker: Either a mortgage broker or lender, depending on which one the consumer is working with more closely, must provide the Loan Estimate form upon receipt of an application by a consumer; the lender is still responsible for complying with all the associated requirements for provision of the Loan Estimate form—even if the mortgage broker provided the Loan Estimate form.

Timing for providing the Loan Estimate form: The consumer must be given the form no later than three business days after application for a mortgage loan. The definition of an “application” has been changed. Now, an application consists of six pieces of information which are submitted. These are:

1. consumer’s name
2. income
3. social security number to obtain a credit report
4. the property address
5. an estimate of property value
6. the loan amount requested

  NOTE: What has changed with this definition is that “any other information necessary”—a catch-all—has been removed: this is the extent of the verifying information that can be requested for submission prior to providing the Loan Estimate. While a lender may request additional information from the consumer, a loan estimate cannot be held up because the lender is waiting for further verifying information. Those six pieces of information trigger the timing requirement for a three-business-day delivery of the Loan Estimate.

Fee limitation: Consumers can’t be charged for fees until after they’ve been given the Loan Estimate form and consumers have agreed to proceed with the transaction.

Early estimate disclaimer: Written estimates can be made prior to application, with one caveat: these must have a disclaimer so no one confuses that early estimate with the actual Loan Estimate form, and the disclaimer is also required for loan advertisements.