Intending to Proceed

by C/A Staff

Today we’re looking at Regulation Z’s rule on intent to proceed. At its heart, the rule is quite simple—the bank is not allowed to impose fees on a consumer before that person has received the Loan Estimate (LE) and provided intent to proceed with the transaction. We do get a variety of hotline questions about the intent to proceed requirement, though, so we’ll go over a few of those right now. 

First things first—it’s always important to look at scope. The intent to proceed requirement technically only applies to TRID loans; i.e. consumer-purpose, closed-end loans that are secured by any real estate.  Now there is only one exception from this requirement, and that is for the credit report, as long as it is “bona fide and reasonable.” So your bank is allowed to charge for a credit report before providing the LE or receiving intent to proceed, but nothing else. 

Another frequent question is whether a consumer must provide intent to proceed in writing. This is a common misconception, but not a requirement. The rule allows the consumer to provide the bank with intent to proceed in “any manner the consumer chooses,” unless the bank requires that it be provided a certain way. Many bank or investor policies do require that intent to proceed be provided in writing rather than orally for documentation purposes, in which case the consumer would have to provide it in writing—but it’s never been a requirement in the actual rule.

Although it doesn’t come up too often, it’s important to note that silence is not enough to show intent, under any circumstance. For example, the bank cannot provide the LE, wait a while for the consumer to respond, and then charge the consumer a fee for an appraisal if the consumer does not respond in that time. This is true even if the bank disclosed this to the customer—it’s just not allowed at all. 

Yet another is whether the bank can order certain services, like an appraisal, before getting intent to proceed. We interpret that the bank can do this, as long as the bank accepts that it will have to absorb the whole fee if intent to proceed is never provided.

Another that comes up is what the meaning of “impose is”—the rule says that a bank imposes a fee if it “requires a consumer to provide a method for payment, even if the payment is not made at that time.” So simply requiring a credit card number, even if it isn’t used, or requiring a check, even if it isn’t cashed, would not be allowed if it’s for a restricted fee. 

A couple of other notes as this relates to other rules is that intent to proceed only has to be obtained once for any transaction. Even if multiple revised LEs are provided, intent to proceed does not have to be obtained again for each one. And even though they sound similar, “joint intent” is a completely separate requirement under Reg. B, rather than reg. Z, and has very different requirements.

We do have a sample of a notice of intent to proceed available on the website, as well as a full TRID toolkit. For any more questions, you can always contact us on the hotline.