The Importance of Compliant Loan Estimates

A “Loan Estimate” is exactly what it sounds like. It’s an estimate of loan costs and other terms/details specific to an application for a mortgage loan. A Loan Estimate must be provided within three business days of an application and the disclosed fees are generally to be available for at least 10 business days. The intent is to get information in an applicant’s hands quickly so they have time to shop around and compare your rates, fees, terms, etc., to other financial institutions.

In some ways, however, the term “estimate” can be a little deceiving. Since you can’t possibly know what the actual fees and terms will be that early in the process, you have to estimate; but, you need to be careful with “how” you estimate. The TRID Rule requires what’s called a “good faith standard”, which means you can’t just pull your estimates out of thin air. You should be able to support your estimate is based on the best information available to you at the time the disclosure is provided.

Jerod explains more in the video.


TRID Resources!

Video Highlights:

  • TRID’s “good faith standard” applies to Loan Estimates, as well as Closing Disclosures and any revised disclosures.
  • Estimates must be based on the best information reasonably available and due diligence is necessary when obtaining such information.
  • Lenders cannot simply pull numbers out of the sky but must reach out to relevant parties for fee information.

Published
2024/02/15

 

Jerod Moyer

Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru. Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports-related!

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