Mortgage Loan Origination Activities
What this domain tests
Origination activities test the file from first contact through closing and post-closing: taking application, disclosures, processing, underwriting, rate lock, closing, funding, and loan originator compensation.
Core process
- Application: under TRID, six pieces make an application: consumer name, income, Social Security number, property address, estimated value, and loan amount.
- Disclosures: LE after application; CD before consummation; changed circumstances may require revised disclosures.
- Processing and underwriting: verify income, assets, debts, title, appraisal, and insurance; document ability to repay.
- Rate lock: a lock is a commitment with an expiration date; extensions may cost points.
- Closing and funding: CD review, signing, right of rescission for refinances, disbursement, and post-closing file review.
- Compensation: loan originator pay cannot be based on transaction terms other than loan amount; steering and dual compensation are restricted.
Worked example
On Monday a borrower gives her name, income, SSN, property address, estimated value, and loan amount. That is an application, so the LE is due by Thursday. The loan officer wants to collect an appraisal fee Tuesday. Before the LE, only a bona fide, reasonable credit-report fee may be collected; the appraisal fee must wait. If the borrower locks Tuesday and the lock expires before closing, an extension fee may apply unless the delay is the lender’s.
Traps
A prequalification is not always an application. A rate lock is not a loan approval. Do not back-date disclosures or treat a revised LE as curing every tolerance violation. Do not charge application or appraisal fees before the LE except the permitted credit-report fee. A right of rescission applies to certain refinances, not purchases.