Mortgage Loan Origination Activities
Mortgage Loan Origination Activities
This domain tests the origination workflow from application through funding. It covers disclosures, verification, appraisal, underwriting, closing, and rescission.
Core activities
- Application and disclosures: Take a complete application, provide the Loan Estimate within three business days, and obtain the borrower's intent to proceed before collecting most fees.
- Processing and underwriting: Verify income, assets, debts, and property information. Order the appraisal independently and avoid influencing the appraiser.
- Closing: Provide the Closing Disclosure at least three business days before consummation. Ensure figures match the settlement statement and closing instructions.
- Rescission: For refinances and home equity loans secured by a principal dwelling, the borrower has three business days after consummation to rescind. Purchase-money loans do not carry this right.
- Identifier: Use your NMLS unique identifier on required origination documents and advertising.
Worked example
A borrower refinances her principal residence and signs on Tuesday. The rescission period runs Wednesday, Thursday, and Friday, ending Friday at midnight. The lender should not disburse until after that period; many lenders fund the next business day. If the loan were a purchase, no rescission right would apply, so the same three-day wait would not be required.
Traps
Treating the Closing Disclosure timing rule as identical to the Loan Estimate rule. Charging an appraisal fee before intent to proceed. Discussing a target value with an appraiser. Applying rescission to a purchase transaction. Letting a closing date pressure you into delivering the CD late.