Nothing in the existing mortgage laws and rules specify that the locking of a loan with a TBD address triggers the disclosure requirements, including the Loan Estimate (LE). It seems like a simple solution. You don’t have the six pieces of information to form a full application, so don’t issue an LE.
The problem with that is found in 12 CFR 1026.19(e)(2)(i), which prohibits an entity from charging anything other than a credit report fee before issuing the LE and receiving an intent to proceed from the borrower. If you opt to issue the LE, you are bound to the disclosure without knowing about the property. In fact, comment 19(e)(3)(iv)(A)-3 states that an LE may be issued on a TBD, but “ … if a creditor provides the disclosures required by § 1026.19(e)(1)(i) prior to receiving the property address from the consumer, the creditor cannot subsequently claim that the receipt of the property address is a changed circumstance … ” Emphasis added.
There are several creditors that are using a variety of terms, including “program fee” a “hold fee” and “upfront closing costs, refundable at closing” to collect an upfront lock-in agreement fee. There are some creditors that require a signed financing agreement in conjunction with locking the loan. This fee is often non-refundable if the loan does not close. It may be refundable at closing, paid towards closing costs, depending on the creditor.