New Lending Requirement

1. WHO PREPARES THE CLOSING DISCLOSURE?

The new CFPB rule provides that the creditor is ultimately responsible for preparation of the Closing Disclosure.  However, the rule also allows the creditor to delegate some or all of the preparation to the settlement agent.  Determining which system will create the final form is important in establishing workflows for the transfer of information.

2. WHO, WHEN AND HOW MUST THE CLOSING DISCLOSURE BE DELIVERED TO THE CONSUMER?

Generally, the creditor is responsible for delivery of the Closing Disclosure form no later than three business days before consummation.  Creditors may also contract with settlement agents to have the settlement agent provide the Closing Disclosure to consumers on the creditor's behalf.

To ensure the consumer receives the Closing Disclosure on time, creditors must arrange for delivery as follows:

*By providing it to the consumer in person
*By mailing, or by other delivery methods, including email. Creditors may use electronic delivery methods subject to compliance with the consumer consent and other applicable provision of the Electronic Signatures in Global and National Commerce Act.
*Creditors must ensure that the consumer receives the Closing Disclosure at least three business days prior to consummation even if the settlement agent was to deliver the form.

3. WHAT CLOSING DISCLOSURE DELIVERY TIMING PERIOD SHOULD YOU KNOW?

As part of the final rule creating the new forms, the CFPB determined that consumers would be better served by having a short time to review the new Closing Disclosure prior to signing their loan documents.  As a result, in its rule CFPB mandated consumers have three business days after receipt of the Closing Disclosure to review the form and its contents.

However, the three business day review period starts upon "receipt" of the form by the consumer.  Unless some positive confirmation of the receipt of the form (i.e. hand delivery), the form is "deemed received" three business days after the delivery process is started (i.e. mailing).  As a result, the combination of the "delivery time period" and the "review time period" results in six business days from mailing to loan signing.