Sunday Night Phone Call: Application, Disclosures, and Fees
At 8:40 p.m. on Sunday, March 9, a borrower calls Dana and gives her: full name, Social Security number, monthly income of $6,400, the address of a condo she wants to buy for $295,000, an estimated value of $295,000, and a requested loan amount of $265,500. Dana's office is closed Sunday and Monday, March 10, for a company holiday, and reopens Tuesday, March 11. The borrower emails her W-2s Sunday night and says, "Run my credit and let's get going - I'll pay whatever you need." Dana wants to order the appraisal Tuesday and collect the $550 appraisal fee from the borrower at the same time.
1. Is there an application on file, and on what date is it received?
Read the worked answer
Yes - all six trigger items are present: borrower's name, income, Social Security number, property address, estimated value, and loan amount. That is the Reg Z definition of an application (12 CFR 1026.2(a)(3)), and it is not a signed form test. A phone call qualifies.
Receipt date: Tuesday, March 11.
The three-business-day Loan Estimate clock uses business days defined as days the creditor's offices are open to the public for carrying out substantially all business functions (12 CFR 1026.2(a)(6)). Sunday the office is closed; Monday is a company holiday and the office is closed. So the first business day on which the creditor is open and has the information is Tuesday, March 11.
Practical caution: some systems will date-stamp the call Sunday. If there is any chance a regulator or investor would treat Sunday as receipt, deliver the Loan Estimate earlier rather than later. Nothing is gained by waiting; the safe course is to treat receipts conservatively and drown the borrower in early disclosure rather than defend a technical date.
2. When is the Loan Estimate due, and by when must it be delivered or mailed?
Read the worked answer
Due within three business days of receipt.
- Receipt Tuesday, March 11.
- Business days: Wed 12, Thu 13, Fri 14.
- Deadline: Friday, March 14 - delivered or placed in the mail by that date.
Rules to apply:
- The creditor must deliver the Loan Estimate or place it in the mail no later than three business days after receipt of the application (12 CFR 1026.19(e)(1)(iii)).
- If it is mailed, the consumer is deemed to have received it three business days after mailing, but that presumption does not extend the delivery deadline itself.
- Electronic delivery is permitted with the consumer's consent under E-SIGN; a phone call is not a consent to electronic delivery of disclosures.
- The estimate must reflect the actual loan terms she described - $265,500 on a $295,000 purchase, which is about 90% LTV. If that LTV requires mortgage insurance or triggers a higher-priced escrow requirement, it must show up on this first estimate, not on a later revised one.
Bottom line: the deadline is Friday, and the file should be engineered so the estimate goes out Wednesday or Thursday.
3. Can Dana order the appraisal and charge the $550 fee on Tuesday? What did the borrower's statement actually accomplish?
Read the worked answer
No, not yet.
Two conditions must both be met before any fee is collected (12 CFR 1026.19(e)(2)(i)):
- The consumer has received the Loan Estimate, and
- The consumer has indicated an intent to proceed.
On Tuesday the Loan Estimate has not been delivered, so neither condition is met.
What "I'll pay whatever you need" accomplished: it is an offer, not an intent to proceed with this application. It is also not a blank check - no fee is authorized until the borrower has the estimate in hand and can see what she is being asked to pay. Intent to proceed itself does not require a signature; it can be verbal or electronic and should simply be documented in the file.
The one exception: a bona fide and reasonable fee for obtaining a credit report may be collected before the Loan Estimate and intent to proceed. That is the only fee.
What Dana should do: deliver the Loan Estimate first, get the documented intent to proceed, then order the appraisal and collect the $550. If she wants to lock the borrower in and speed the file, she can use a valid changed-circumstance re-disclosure later - but not an appraisal order on Tuesday in reliance on a phrase from a Sunday night phone call.