What is the 3/7/3 rule?

What is the 3/7/3 rule?

• A. 3 business days to provide LE and only collect cost of credit report; 7 days to wait to close; 3 days to close after a qualified change of circumstances
• B. 3 business days to provide LE; 3 days to close; 7 days to wait after changes
• C. 3 business days to provide LE; 7 days to close; 7 days to wait after changes
• D. No such rule exists

Answer: (A)

The question tests timing rules for disclosures and upfront charges under the TRID process. The rule says you must provide the Loan Estimate within three business days of receiving an application, and, at that early stage, you may only collect the cost of obtaining the borrower’s credit report. Any additional charges cannot be collected until after the LE is issued. After the disclosures are provided, there is a seven-day waiting period before closing to give the borrower time to review the terms. If a qualified change in circumstances occurs and requires revised disclosures, there is a new three-day window to close after those revised disclosures are provided. This combination of timelines—three business days for the LE with only the credit report cost allowed upfront, a seven-day waiting period before closing, and a three-day close window after a qualified change in circumstances—defines the 3/7/3 rule.

The question tests timing rules for disclosures and upfront charges under the TRID process. The rule says you must provide the Loan Estimate within three business days of receiving an application, and, at that early stage, you may only collect the cost of obtaining the borrower’s credit report. Any additional charges cannot be collected until after the LE is issued. After the disclosures are provided, there is a seven-day waiting period before closing to give the borrower time to review the terms. If a qualified change in circumstances occurs and requires revised disclosures, there is a new three-day window to close after those revised disclosures are provided. This combination of timelines—three business days for the LE with only the credit report cost allowed upfront, a seven-day waiting period before closing, and a three-day close window after a qualified change in circumstances—defines the 3/7/3 rule.