Mortgage loan origination activities

Loan Inquiry & Application

Origination activities are the largest section of the test (27%). Application questions focus on when an application exists, what may be collected and charged before the Loan Estimate, which early disclosures go out, and how to document the borrower's choices.

Mortgage loan origination activities3 min read7 sections

Must-know for the exam

Six items make a TRID application: name, income, SSN, property address, estimated value, loan amount (12 CFR 1026.2(a)(3)(ii)).
You may ask for more information, but may not require documents before the Loan Estimate (12 CFR 1026.19(e)(2)(iii)).
Only a bona fide credit report fee may be charged before the Loan Estimate and intent to proceed (12 CFR 1026.19(e)(2)(i)).
Pre-application written estimates must warn: 'Your actual rate, payment, and costs could be higher' (12 CFR 1026.19(e)(2)(ii)).
Within 3 business days: Loan Estimate, service provider list, Toolkit (purchase), counseling list, appraisal-copy notice.
ARM applicants get the CHARM booklet and program disclosure at application or before a non-refundable fee (12 CFR 1026.19(b)).
Electronic disclosures need E-SIGN consent first (15 U.S.C. 7001(c)).
A creditworthy applicant's spouse may not be required to co-sign the note (12 CFR 1002.7(d)).
A withdrawn application needs no notice of action taken (12 CFR 1002.9(e)).
Occupancy (primary, second home, investment) must be stated truthfully; false statements violate 18 U.S.C. 1014.

On this page · 7 sections

Traps that cost marks

Issuing a 'pre-approval' without pulling credit or verifying anything.
Adding asset balances or employment documents to the six-item list.
Treating a 'to be determined' property as satisfying the address item.
Thinking a creditor may collect nothing beyond the six items.
Accepting a 'refundable' or 'voluntary' fee before the Loan Estimate.
Using a pre-application worksheet that mimics the Loan Estimate.
Confusing the 1003 application with the 1004 appraisal.
Treating occupancy as a minor pricing detail.

Why it matters on the test

The application starts every legal clock. The test checks whether you know when that happens, what you may do before the Loan Estimate, and how to take an application fairly and accurately.

The rule: what an application is

Under TRID, an application is the submission of six pieces of information (12 CFR 1026.2(a)(3)(ii)):

•consumer's name
•income
•Social Security number to obtain a credit report
•property address
•estimate of the property's value
•mortgage loan amount sought

Once all six are received, by any channel including phone or email, the Loan Estimate clock starts. The creditor may ask for more information but may not require verification documents before issuing the Loan Estimate.

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