ment or not) is also provided because
that’s what the customer wants.
But since the customer only wanted
a preapproval and is not applying in
the practical sense, wouldn’t the Loan
Estimate be unnecessary? The answer is
no since the TRID is absolute: when the
six pieces of data are submitted, it constitutes an application and the three-day
clock for the bank to provide the Loan
Estimate begins. Again, don’t be confused by what the bank calls this. Look
to what is happening and whether the
TRID requirements have been met.
The CFPB itself stated as much. In the
TRID final rule, it stated, “the Bureau
believes that requests for preapproval as
defined in the proposal and final rule
represent credit applications.” If the bank
wishes not to provide a Loan Estimate
along with the preapproval letter, the
consumer must not submit all six pieces
of information to the lender. It’s that
simple. By the way, a bank is permitted
(but not required) to issue a Loan Esti-
mate even if it doesn’t have a property
location yet, but that certainly wouldn’t
be logical in a preapproval setting.
This also applies to HMDA: if the
activity constitutes a preapproval under
HMDA’s definition, it must be reported
on the bank’s HMDA LAR, regardless
of what it’s called. This is true regardless
of whether the customer receives a Loan
Estimate or not. All of HMDA’s require-
ments of the preapproval definition must
be met, and again they are different than
TRID.
In the end, don’t confuse HMDA with
TRID. Look at precisely what is going
on according to HMDA’s definition of
“preapproval” and TRID’s definition of
“application” to determine what must
be done. Preapprovals aren’t yesterday’s
news, but under TRID banks may have
to supply more disclosures than they
originally thought. ■
ABOUT THE AUTHOR
CARL G. PRY, CRCM, CRP, is managing director for Treliant Risk Advisors in
Washington, D.C., where he advises clients on a wide variety of compliance, fair
lending, corporate treasury, and risk management issues. Over the last 18 years,
Pry has held senior leadership positions including senior vice president and
compliance manager for Compliance and Control Department at Key Bank in
via email at cpry@treliant.com or by telephone at (440) 320-4662. S H U T
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