Pre-Qualification Form & The Loan Status Update with TRID Updates

You must first complete TILA-RESPA Integrated Disclosure rule changes to AAR forms before viewing this Lesson
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Lines 1-5 Of the Pre-Qual

line 1-5

The Pre-Qualification Form is now required to be submitted in conjunction with the Residential Resale Real Estate Purchase Contract (Contract) at the time of offer.

If a buyer has not consulted with a lender when submitting a Contract, the buyer should simply check the box at line 3 and complete only lines 4-5.

Lines 6-31 Of the Pre-Qual

line 6-31

Line 23

Changes that trigger a new three-business-day review period are:

  • The APR (annual percentage rate) increases by more than 1/8 of a percent for regular loans (most fixed-rate loans) or 1/4 of a percent for irregular loans (most adjustable loans). A decrease in APR will not require a new three-day review if it is based on changes to the interest rate or other fees. Lenders have been required to provide a three-day review for these changes in APR since 2009.
  • A prepayment penalty is added, making it expensive to refinance or sell.
  • The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.
Quick Quiz

Fill in the Blank:
The Pre-Qualification  is now required to be submitted in conjunction with the Residential Resale Real Estate Purchase Contract (Contract) at the time of .

Line 31

The initial LSU must be delivered within “ten (10) days after Contract acceptance” instead of “five (5)” days

Lines 32-42 Lender Information

line 32-42

Lines 6,36,37

Require the lend to add there Arizona Licence # and NMLO#.

 

Loan Status Update LSU page 1

Loan_Status_Update_Form_Page_1

The initial LSU must be delivered within “ten (10) days after Contract acceptance” instead of “five (5)” days.

The reason for this is because TRID requires that a Loan Estimate must be completed by the lender and provided to the borrower three days after the borrower provides to the lender six pieces of information (loan application) And, because lenders have to abide by this timeframe, providing the LSU within five days of contract acceptance would prove very difficult.

Quick Quiz

Fill in the Blank:
The  for this is because TRID requires that a Loan Estimate must be completed by the lender and provided to the  three days after the borrower provides to the lender six pieces of .

Loan Status Update LSU page 2

Loan_Status_Update_Form_Page_2

Because of the new TRID requirements, page 2 of the LSU now identifies five additional steps in the lending process

1. The lender receiving the six loan application pieces of information from the buyer;

2.The lender sending the buyer the Loan Estimate;

3.The buyer indicating to the lender an intent to proceed with that lender;

4.The lender providing a Closing Disclosure to the buyer;

5.The buyer’s receipt of the Closing Disclosure from the lender

Quick Quiz

Fill in the Blank:
The buyer indicating to the  an intent to proceed with that lender.

When must the buyer first deliver to seller a completed Loan Status Update?

As evidenced by Section 2e of the Residential Resale Real Estate Purchase Contract, an initial Loan Status Update must be delivered to the seller “within ten days after Contract acceptance.” This is a change from the prior Residential Resale Real Estate Purchase Contract, which required initial delivery of the Loan Status Update within five days after Contract acceptance.

What should a buyer do if their lender refuses to complete a Loan Status Update?

As is currently the case, the buyer should complete, at a minimum, lines 1-40 of the Loan Status Update. The failure of the buyer’s lender to complete the Loan Status Update is not a potential breach and, therefore, not subject to a cure period notice because the lender is not a party to the Contract.

Line 39 of the Loan Status Update states “Buyer commits to work with the above referenced Lender on the terms described herein.” Is the term “commits to work with” synonymous with the term “intends to proceed” as used in 12 CFR §1026.19?

No. Intends to proceed is a defined term of art by which a borrower communicates to the lender that they choose to proceed with the loan transaction after having received the Loan Estimate. A buyer can therefore commit to work with a lender via the Loan Status Update and not yet have given formal notice of intent to proceed. If that is the case, the buyer would sign on line 40 of the Loan Status Update, but the box on line 45 would be marked “NO” as that line asks if the “Buyer indicated to Lender an intent to proceed with the transaction after having received the Loan Estimate.”
Quick Quiz

Fill in the Blank:
can therefore commit to work with a lender via the Loan Status Update and not yet have given formal notice of to proceed.

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