Title closers and notary signing agents everywhere have been struggling with the new 1003 Residential Loan Application which grew from 5 pages to over 10 pages. New initialing and signing requirements have everyone guessing on the correct way to execute this document. There is not a lot of consistency on how lenders are organizing this form and there is no guidance to be found on just where borrowers should be signing and initialing.

To take the guesswork out of ensuring this document is signed correctly, we are providing these tips to ensure you don’t miss a thing!

Where are initials required?

Initials are NOT required if this is an application for individual credit.

Initials ARE required on forms that are joint applications for credit. Finding the correct initial lines however can be a challenge!

Here’s what to look for:

The initial lines for joint applicants are found in Section 1: Borrower Information. If there are two borrowers, the section called “Type of Credit” will be marked saying “I am applying for joint credit.” The additional borrower will be listed to the right of this section in the “List of Names of Other Borrower(s) Applying for this Loan.” In our example, Samuel Quick Signer is our first borrower so he will initial in the first Section 1 under “1a. Personal Information.”

Because we know there is a co-borrower, we must then look through the application until we find the second Section 1a for Sally Jean Signer. That second Section 1a can be found in several places. Some lenders group the borrowers together and have them both initialing their individual Section 1as before the signature section, which is Section 6. Other lenders have the second applicant sign their Section 1a which is located after the borrowers sign Section 6. Confusing, right?

The important thing to remember is to find the second borrower’s Section1a and have them initial on their joint credit line as well. (see below)

In rare cases, lenders are adding initial lines at the bottom of each page of the application. We’ve only seen it a few times, but it is definitely something to keep an eye out for.

Important! Section 6: Acknowledgments and Agreements

One nice thing about the new Residential Loan Application is that generally speaking, borrowers only have to sign in one place in the document and that is in “Section 6: Acknowledgments and Agreements.” Signature lines are found at the bottom of the Section 6 page and lenders request that dates be written in the full mm/dd/yyyy format. For example: 06/06/2021

In applications where there is one borrower, this is the main area of the application that needs to be signed because as we mentioned, initials are not required for single applicants. But for joint applicants, lenders have found a way to make the Section 6 signature sections just as much of a challenge as the initials.

Most lenders will have both applicants sign on the first Section 6 after the primary borrower’s financial information. (see below)

And yet, other lenders will have the primary borrower sign in the first Section 6 and the additional borrower will sign their own Section 6 which will be located several pages later after their financial information pages.

If that is not confusing enough, some lenders will add Addendum or Continuation Signature pages that will need to be signed as well. The good news is that the signature areas on those pages look exactly like the signature areas in Section 6 and are fairly easy to locate throughout the application.

One section that DOES NOT get signed by the borrowers is “Section 9: Loan Originator Information.” That is for the Loan Originator to complete and sign.

Don’t be afraid to flag the initial and signature sections prior to having the borrowers sign! Seasoned loan closers who haven’t used flags in years are finding it a failsafe way to ensure they don’t miss any of those initials or signatures while shuffling through 10-20 pages of information.

Key Points to Remember!

  • Joint Applicants need to put their initials in their individual Section 1a which may be found on different pages of the application.
  • Single applicants do not need to initial anything. They just sign in Section 6.
  • Joint applicants each need to sign in Section 6, however those signature lines may be on different pages for each borrower.
  • Be alert for any random initial sections that lenders may add to the bottom of the pages or title companies may add to the application with their special “initial here” stamp