Mortgage Loan Origination Activities
Origination activities cover the file from first contact through closing and servicing handoff. The exam focuses on disclosure timing, application definition, verification, closing, and rescission.
Application and disclosures
For TRID, an application generally exists when six items are present: borrower name, income, Social Security number, property address, estimated value, and loan amount. The Loan Estimate must be delivered or placed in the mail within three business days after application. The Closing Disclosure must be received at least three business days before consummation. Changed circumstances can permit a revised LE, but timing and delivery rules still apply.
Processing and closing
Verify income, assets, employment, and credit; order appraisal, title, flood determination, and insurance. Confirm the borrower intent to proceed before collecting most fees. At closing, compare the CD to the LE, address tolerance violations, fund the loan, and record the security instrument. For a covered principal-dwelling refinance, the right of rescission runs three business days after consummation, delivery of rescission notice, or delivery of the CD, whichever is later.
Worked example
Application is complete Monday. The creditor must provide the LE no later than Thursday, counting three business days after Monday. If the CD is delivered Monday, consummation generally cannot occur before Thursday. If the borrower refinances a principal residence, rescission is a separate three-business-day period after closing; it does not delay the purchase of a new home.
Traps
Do not call every inquiry an application. Do not treat the CD as due at closing; it is due before closing. Do not ignore a valid changed circumstance. Do not apply rescission to a purchase-money loan. Do not let a revised LE cure a tolerance violation after closing if the required timing was missed.