Intent to proceed: what happens after the Loan Estimate

The fee restriction

Regulation Z, at 12 CFR 1026.19(e)(2), says that neither a lender nor anyone else may impose a fee in connection with your application until two things have happened:

1. you have received the Loan Estimate, and
2. you have told the lender you intend to proceed with the loan it describes.

The one exception is a fee for your credit report. The rule allows it before the Loan Estimate as long as it is bona fide and reasonable in amount.

That means an appraisal fee, an application fee, a processing fee or a rate lock fee should not be collected before you have the Loan Estimate in hand and have said yes. If a lender asks for a credit card number for anything beyond the credit report before then, ask what the charge is for.

Estimates before the Loan Estimate

Lenders sometimes give you a personalized quote or worksheet before the official form. The rule allows that, but any written estimate of terms or costs specific to you must carry a clear statement at the top of the first page, in at least 12-point type, saying that your actual rate, payment and costs could be higher, and that you should get an official Loan Estimate before choosing a loan. A worksheet is not a substitute for the Loan Estimate.

How to signal intent to proceed

The rule lets you indicate intent to proceed in any way you choose, unless the lender requires a particular method. Some lenders ask for a signature or a click in an online portal. Others accept an email or a phone call. Whatever the method, the lender has to document it.

Use the lender's method and keep your own record of the date. If you are comparing several lenders, tell only the one you choose. Telling a lender to proceed does not obligate you to close with it, but it does let it start charging fees, ordering the appraisal and processing your file.

How long an offer lasts

Loan Estimates do not stay fixed forever. Under 1026.19(e)(3)(iv)(E), if you indicate intent to proceed more than 10 business days after the Loan Estimate was provided, or after a longer period the lender specifies, the lender can issue a revised estimate. In practice, that means the closing cost figures can change if you wait too long.

Page 1 of the Loan Estimate shows the date and time the estimated closing costs expire, and whether the rate is locked. If the rate is not locked, it can change at any time until you lock, regardless of intent to proceed.

Shopping without paying for it

Because the fee restriction applies to every lender, you can collect several Loan Estimates for the price of a credit report or two. The CFPB's guidance on what lenders need to issue a Loan Estimate lists six pieces of information: your name, income, Social Security number for the credit pull, property address, estimated value and loan amount.

To keep comparisons meaningful:

• ask each lender for the same loan amount, term and type
• request them within a short window so pricing is from similar market conditions
• ask whether each quote assumes points or lender credits
• line up Section A, origination charges, which you cannot shop for separately

After you proceed

Expect the lender to:

• collect fees it disclosed, such as the appraisal fee
• request documents for underwriting, like pay stubs and bank statements
• order the appraisal and title work
• ask whether you want to lock the rate, if you have not already

Your closing costs can change only within the tolerance limits Regulation Z sets, unless there is a valid change in circumstances. Keep the Loan Estimate so you can compare it with your Closing Disclosure.

The bottom line

Lenders may charge you only a reasonable credit report fee before you have a Loan Estimate and have said you want to proceed. Use that window to compare estimates from more than one lender, tell only the one you choose, keep a record of the date and watch the expiration on page 1.