Mortgage Origination Activities

The Uniform Residential Loan Application, also called Form 1003, is the standard form used to collect the borrower's income, assets, debts, and property details.

An application is considered received once the lender has the borrower's name, income, Social Security number, property address, estimated value, and loan amount sought.

Receiving all six items starts the 3-business-day window to deliver the Loan Estimate, so the originator cannot delay collecting the sixth item to stall the clock. Before the borrower has both received the Loan Estimate and indicated an intent to proceed, no fee may be imposed except a bona fide and reasonable charge for a credit report.

The Loan Estimate must be provided within 3 business days of application and no later than 7 business days before consummation. The creditor may treat its offer as expired if the borrower waits more than 10 business days to indicate an intent to proceed.

The borrower must receive the Closing Disclosure at least 3 business days before signing. Only an inaccurate APR, a changed loan product, or an added prepayment penalty restarts that waiting period; every other late change is corrected at or before consummation.

A valid changed circumstance, such as new information or a borrower-requested change, lets the creditor issue a revised Loan Estimate that resets the affected fee tolerance. The revised Loan Estimate must go out within 3 business days of learning of the change, and the borrower must receive it no later than 4 business days before consummation. A revised Loan Estimate is also due within 3 business days after the rate is locked.

Zero-tolerance charges cannot increase at all, a 10% bucket covers recording fees and third-party services the borrower was permitted to shop for, and estimates of the rest carry no tolerance limit if they were made in good faith.

Underwriters verify income with documents such as pay stubs, W-2s, or tax returns, and confirm that funds for down payment and reserves are sourced and seasoned.

Lenders must make a reasonable, good-faith determination that the borrower can repay the loan based on verified income, debts, and obligations.

An appraisal establishes the property's market value and condition, and the loan amount is limited by the lower of the appraised value or the purchase price. The creditor must notify the applicant of the right to a copy within 3 business days of application, and deliver every appraisal promptly on completion or at least 3 business days before consummation, whichever is earlier.

A title search confirms clear ownership and existing liens, and a flood determination shows whether the property lies in a special flood hazard area where flood insurance is mandatory. NFIP coverage on a residential building designed for one to four families is capped at $250,000 for the building itself, with a separate cap of $100,000 on contents.

A higher-priced mortgage loan needs a second written appraisal, at no cost to the borrower, when the seller is reselling within 180 days of acquiring the property. The trigger is a price increase of more than 10% where the seller acquired the property 90 days or fewer before the borrower's agreement, and more than 20% where the seller acquired it 91 to 180 days before.

A rate lock guarantees a specific interest rate and terms for a set period, protecting the borrower from rate increases before closing if the loan closes within that window.

At closing the borrower signs the note and security instrument, final figures are reconciled against the Closing Disclosure, and required funds are collected.

After signing, the lender disburses funds and the security instrument is recorded to establish the lien. On a rescindable refinance the creditor may not disburse until the 3-business-day rescission period has run, and it has 20 calendar days after a notice of rescission to unwind the transaction.