Notice of Intent to Proceed with Loan Application (NIPLA) is a letter signed by the loan applicants to inform the lender of their intention to proceed with the loan application and their acceptance of the terms and fees listed in the Good Faith Estimate (GFE).
NIPLA is prepared by the loan processing department of the lender and included with the GFE. The loan applicants review the GFE to understand the loan terms and fees. If they find terms of loan mentioned in the GFE acceptable, they will then sign NIPLA and return it back to the lender to signify their approval to ahead with the loan. With the receipt of NIPLA, the lender can move the application to the underwriting process and can charge fees from the applicants.
Loan applicants should note that the NIPLA does not bind them to obtain the loan from the lender. Even after sending a NIPLA, the applicants are free to withdraw their loan application and go to another lender. The applicants are just accepting the GFE and are not committing to the loan. Also, at this point the lender is not giving a loan approval or loan commitment.
NIPLA is designed to demonstrate compliance with the requirements of CFPB Regulation X, which implements Real Estate Settlement Procedures Act (RESPA). According to § 1024.7 (a)(4) of CFPB Regulation X, the lender (or broker) cannot charge any fee, expect credit report fee, before it has provided the GFE to the applicants and the applicants have given their intention to proceed with the loan application for which the GFE was provided. NIPLA allows the lender to demonstrate that it obtained the required approval from the loan applicants before charging any fees.
While the lender is required to obtain the consent of the applicants to proceed with the loan application, there is no mandate to obtain this consent in a written form. Therefore, there is no requirement in Regulation X to use the NIPLA document to obtain the consent. A lender may choose to demonstrate the receipt applicant’s consent through other means such as obtaining the consent verbally and making a note of it in the loan origination system.
NIPLA may contain the following information:
The terms and fees in the GFE are provided for a minimum of 10 business days from the date when the GFE is provided to the loan applicant. The lender has the option to provide for a longer period of availability of the terms and fees. During this time the lender cannot increase the fee listed in the GFE. Therefore, it is in your best interest to sign and send the NIPLA to the lender during this time period.
NIPLA is not required by Regulation X, and therefore, there are no legally mandated record-keeping requirements for this document. However, since the purpose of the document is to demonstrate compliance with the Regulation X requirements we recommend maintaining the Acknowledgement of Receipt of GFE in the loan file for a period of at least five years from the date of settlement. The document retention period will be consistent with other record-keeping requirements of Regulation X. For declined, cancelled, or withdrawn applications, the document should be maintained for as long as the loan application file is maintained, which would normally be at least 25 months from date of action taken to be consistent with Regulation B recordkeeping requirements.
Updated: Sep 27, 2013