Pre-Quals and TRID…What is a “Property Address?”
Purchase business is the lifeblood of many originators. With affordable homes in low supply, multiple offers on multiple properties is a way of life, especially in the first-time home-buyer segment. And, every real estate agent wants a “pre” something! A Friday in August, and I can’t get this topic off my mind.
On July 31, 2019 the CFPB put out FAQs on this very topic. So, here’s some food for thought.
FAQ Question #4: Is the requirement to provide a L.E. triggered, if the consumer submits 6 pieces…to receive a pre-anything?
FAQ Answer #4: The correct, legal, compliant answer is “YES.” My question for regulators is how does TRID define “submission” of a “property address?”
“Submission” can have a variety of meanings. Just think about how people communicate these days: text messages, Facebook PM, email, maybe the real estate agent provided the address. How about a texted link to the property, with no discussion? Or better yet, one of those self-destructing messaging systems? No trail! I’ve heard it all! How about a voice mail you didn’t get, or a text message to a land line that bounced. (yes some people still use land lines!) So do any and all of these “submissions” trigger disclosure? Is it as simple as “knowledge of a property address?” The old what did you know and when did you know it!
A “property address,”is also not clear. What needs to be clarified is: how does the law qualify the “property address?” I had a buyer tell me they would like the “Mansion for sale on Rodeo Drive,” but they can’t afford it! It’s an address, disclose?
This prompted me to call a Financial Examiner at one State Department of Banking to understand how they view “a property address.” He REALLY simplified it. He said, “I don’t care HOW you got the property. If you have an address, you MUST disclose.” I pressed on; “without a contract?” “DISCLOSE“. “What if the property isn’t even listed?” “DISCLOSE. ” “What if it’s already under contract?” “DISCLOSE,” to which he added “and…remember, you can’t discourage consumers from providing information!”
The intent of TRID makes sense. Buyers have a right and need to know, the total amount of cash they need to purchase a home, BEFORE they make an offer! TRID does not, however unfortunately, state, “only if the borrower makes an offer,” or “once the borrower is under contract,” or “if the house is listed”, or “if the seller accepts the offer.” It merely states 6 pieces, disclose!
Consider this scenario: a borrower was pre-qualified with the 5 pieces, 2 months ago and today sends you an email with a list of 4 properties they are going out to see over the weekend. They want to know payment differences. We now have 4 “property addresses.” Disclose on all 4? Just the highest purchase price? Highest loan amount? Highest APR? Highest payment? Highest costs? What is the buyer trying to find out? Worst case scenario?
If any regulators are reading this, under the above scenario, does the law really intend for consumers to receive 4 Loan Estimates? And if, not, would you be so kind as to point us to the exemption? Any clarification would be very helpful. The myriad of what ifs above might be an indication that something a bit more specific is needed.
What do you think? deb@cloes.online
