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Our question deals with property address for an application and LE.
Guidance states for a LE: “Property is the address of the property (which must include the zip code) that will secure the transaction. If the address of the Property is unavailable, use a description of the location of the property, for example a lot number. Always use a zip code”.
Guidance on Application: Transactions subject to § 1026.19(e), (f), or (g), an application consists of the submission of the following six pieces of information:
The consumer’s name;
The consumer’s income;
The consumer’s social security number to obtain a credit report;
The property address;
An estimate of the value of the property; and
The mortgage loan amount sought.The property address is one of the required components of an application so how do you issue a LE if the property address is unavailable?
Could you use a lot # and zip code (LE guidance) on the application as the property address?
What would be done in the case where someone might have a general idea of where they want to buy a house (but do not have a particular property address or may be looking at multiple properties) but intend to secure the loan with a different property? Would the property securing the loan be used as the address on the application?
Sorry for all the questions but any help is greatly appreciated.
Thanks!
To answer the first question above: “The property address is one of the required components of an application so how do you issue a LE if the property address is unavailable?”
It would be in your best interest not to issue a Loan Estimate without the property address. You do not have a completed application until ALL six pieces of the application are received including the property address; therefore, the timing requirements of the Loan Estimate are not triggered. Once the property address is received by the borrower, then document receipt of the address and the date received to allow auditors/examiners to understand that the property address was received after the initial application was started and to ensure the Loan Estimate was delivered within the required three days of receipt of the property address.
In the scenario above, if the customer would like an estimate of closing costs, you should follow the rules in 1026.19(e)(2)(ii) that allow for a written estimate to be provided to the borrower prior to delivery of the Loan Estimate. If utilizing this estimate, be sure proper disclosure is provided at the top of the estimate.
The second question: “Could you use a lot# and zip code (LE guidance) on the application as the property address?” Yes, if you are taking an application that hasn’t been provided an address you would utilize a lot# and zip code. This would be considered receipt of the property address and would trigger the timing requirements of the Loan Estimate if the other 5 pieces of information have been gathered at application.
The third question: What would be done in the case where someone might have a general idea of where they want to buy a house (but do not have a particular property address or may be looking at multiple properties) but intend to secure the loan with a different property? Would the property securing the loan be used as the address on the application?
The property that is securing the loan should be the property utilized as the address on the application. Under 1026.19(e)(1)(i): In a closed-end consumer credit transaction secured by real property, other than a reverse mortgage subject to 1026.33, the creditor shall provide the consumer with good faith estimates of the disclosures in 1026.37 (Loan Estimate). Key words here are “closed-end”, “consumer”, and “real property”; as long as it meets those requirements and isn’t a reverse mortgage, you would utilize the requirements in 1026.37.
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