Application and Disclosures

Everything begins when the application is taken. A borrower looking to get a mortgage starts by speaking with a loan officer who works for either the lender (a retail loan) or a mortgage broker (a wholesale loan). The loan officer helps the borrower pick an initial product and begins the process of obtaining the information needed to complete the application. 

The initial loan application serves as the true starting point by picking a loan product that meets the needs of the borrower, then obtaining the basic information that needs to be considered and/or verified to determine if the borrower is an acceptable prospect for the loan. It is critical to get as accurate and complete an application as possible, as ultimately the lender must develop a final financial profile with supporting documentation. Any gaps or discrepancies will require additional time and documentation to reconcile. 

Regulation X gives a legal definition of what is a mortgage application. There are six pieces of information, which can be remembered with the mnemonic ALIENS.

A.Address of the subject property. 

L.  Loan amount requested.

I.   Income of the borrower.

E.  Estimated value of the property.

N. Name of the borrower. 

S. Social Security number of the borrower.

While this information is far short of what would be considered a complete application, once this information has been provided, either orally or in writing, it is considered to have met the legal requirements of an application and two important deadlines come into play, the requirement to provide disclosure and the requirement to provide a credit decision.