Anyone who's closely read the nearly
For everyone else, the Consumer Financial Protection Bureau recently clarified how a loan pre-approval doesn't automatically trigger TRID's three-day window for delivering initial disclosures.
The workaround was mentioned during a
The CFPB first pointed out that TRID only prevented lenders from "requiring" such information, but that if voluntarily provided by the borrower it was permissible. Of course, the agency immediately followed up by explaining that a lender that explicitly or implicitly requires such documentation would be violating the law.
This obviously creates risks for lenders who expect to rely upon the borrowers' "voluntariness," since a borrowers' subjective belief they implicitly had to provide documentation could create risks for a lender.
However, it is only after all six pieces of information are collected that the requirement of a Loan Estimate is triggered. The CFPB also indicated that as long as a lender did not collect the six pieces of information necessary to trigger the Loan Estimate, a
"The bureau does not believe that the
Hence, as long as the lender does not, for instance, obtain the subject property address, the lender has no obligation to provide the disclosures and/or Loan Estimate.
Accordingly, those lenders that wish to provide pre-approvals may be well advised to consider making pre-approvals general, as opposed to specific to a designated property.
Ari Karen is an attorney at Offit Kurman.