General mortgage loan origination activities
General mortgage loan origination activities
This domain tests the file flow: taking a valid application, issuing and revising disclosures, documenting ability to repay, and closing without tolerance or rescission errors.
From application to intent
An application exists for TRID when the creditor receives six pieces of information: borrower name, income, Social Security number, property address, estimated value, and loan amount. The MLO may not collect fees beyond permitted items until the borrower indicates an intent to proceed. The Loan Estimate must be delivered or placed in the mail within three business days after application.
Changes and tolerances
A valid changed circumstance permits a revised LE, generally within three business days of receiving the information. Fees fall into zero-tolerance, 10% cumulative, and unlimited categories. Zero tolerance includes lender credits, fees paid to affiliates, and fees for services the borrower cannot shop for. The 10% bucket covers recording fees and certain third-party services where the borrower can shop but the lender selects the provider. Unlimited items include prepaid interest, property insurance, and escrow deposits.
Underwriting and closing
Verify income, assets, employment, debts, and credit with reasonably reliable records. Document the eight ATR factors, including DTI and simultaneous loans. Keep appraisals independent. Before consummation, provide the CD at least three business days in advance and confirm rescission timing for refinances.
Worked example
The LE lists a $100 recording fee and an $800 title fee in the 10% bucket. Actual costs are $150 and $900. The baseline is $900; 10% is $90. The $150 increase exceeds the allowed $90 by $60, so the lender must cure the tolerance-typically by refund or credit within 60 days-unless a valid changed circumstance justifies revised disclosures before closing.
Traps
Do not apply the 10% test fee-by-fee; it is cumulative. Do not treat a revised LE as optional when a changed circumstance increases a zero-tolerance fee. Do not confuse the CD’s three-business-day rule with the LE’s three-business-day rule; the definitions differ.