How the CFPB Three-Day Waiting Period Works

On August 27, 2015   /   Blog, Escrow  


In addition to the delivery period we discussed in our previous video, lenders must ensure the borrower receives the Closing Disclosure no later than three business days before consummation. This is referred to as a waiting period.

Three Business-Day Waiting Period

The CFPB final rule requires the lender to give the borrower three business days to thoroughly review the Closing Disclosure to enable them to compare the charges to the loan estimate and ensure the cost and loan program they are obtaining are as expected. In our previous video, we explained the waiting period begins on the day the Closing Disclosure is sent. It does not start the next business day!

Waiting Period Example

Closing Disclosure Timeline - CFPB

If the Closing Disclosure is delivered by mail, email, courier or fax on a Monday, it is assumed that the delivery period expires on Wednesday at midnight. Then the waiting period begins, which means the loan may not be consummated less than three business days after the Closing Disclosure is received by the borrower.

The waiting period includes Thursday, Friday and Saturday, therefore the borrower would be able to sign on the next business day which is Monday, unless Monday is a federal holiday.

Exceptions to the Rule

If signing is scheduled during the waiting period, the lender must postpone signing unless closing within the waiting period is necessary to meet a bona fide personal financial emergency. Consumers may waive their right to receive the Closing Disclosure three days prior to consummation only if they have a bona fide personal financial emergency.

Bona fide personal financial emergencies are extremely rare and determining whether one exists is fact intensive. The only example provided by the CFPB is the imminent sale of the consumers’ homes through foreclosure, where the proceeds of the new mortgage can save the home from foreclosure, which isn’t very realistic.

Revisions to the Closing Disclosure

If there are changes to the loans APR, changes to the loan product, or a prepayment penalty is added to the loan after the Closing Disclosure has been delivered to the borrower, then the lender must ensure the Closing Disclosure is revised and a new delivery period and waiting period begins. For any other changes which occur before the consummation that do not include the three we just discussed, the lender must provide a corrected Closing Disclosure with any terms or cost that have changed and ensure the borrower receives it; there is no additional three business day waiting period required.

The lender must ensure only that the borrower receives the revised Closing Disclosure at or before consummation. There is no delivery or waiting period for the seller. The settlement agent must provide the seller its copy of the Closing Disclosure no later than the day of consummation.

Rescission

The rule did not make any changes to the existing rescission requirements under regulation Z. This means if the borrower is refinancing their existing loan, then the delivery, waiting, and three day right to resend applies. Keep in mind the rescission timeline is calculated differently than the delivery and waiting periods. The first day of the rescission period starts the day after all borrowers have received their notice of right to resend.

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How the TRID Closing Disclosure Delivery Period Works

On August 12, 2015   /   Blog, Escrow  


The new TRID rule has very strict requirements as to the delivery of the Closing Disclosure. The Closing Disclosure must be delivered to the borrower at least three business days prior to the consummation of the loan. If the Closing Disclosure is hand delivered, a waiting period commences which we’ll discuss further in a later post.

If the Closing Disclosure is delivered by mail, email, courier, or fax a delivery period of three business days precedes the waiting period. The delivery period does begin on the day the Closing Disclosure is sent. It does not start the next business day.

Delivery Example

Closing_Disclosure_Timing4-blue_03If the Closing Disclosure is delivered by mail, email, courier, or fax on a Monday it is assumed the delivery period expires on Wednesday at midnight.

Who Delivers the Closing Disclosure?

The rule makes the lender responsible for ensuring that the consumer receives the Closing Disclosure. Lenders may work with the settlement agent to have them deliver the Closing Disclosure to consumers on their behalf. Lenders and settlement agents also may agree to divide responsibilities with regard to completing the Closing Disclosure with the settlement agent assuming responsibility to complete some or all of the Closing Disclosure.

The lender must maintain communication with the settlement agent to ensure the Closing Disclosure and its delivery satisfy the requirements described above and the creditor is legally responsible for any errors or defects.

In the end, the CFPB will hold the lender responsible for ensuring the preparation and delivery of the Closing Disclosure is done properly regardless of who actually prepares the form and delivers it.

Wells Fargo Leads Industry

Wells Fargo led the industry by informing them of their intention to deliver the Closing Disclosure to the borrower. In September of 2014 they issued a statement which read:

Evidence of delivering the borrower’s Closing Disclosure with receipt at least three business days prior to closing are critical requirements for us. The data to support this must be readily accessible for internal and external audit. We considered many factors, such as the large number of settlement agents who close Wells Fargo loans in local markets, their closing volumes, limited integration capabilities to provide compliance data to us, and the evolving use of electronic delivery within the Wells Fargo loan process.

At this point in time, we believe that this critical compliance evidence can only be provided if Wells Fargo delivers the Closing Disclosure directly to our borrowers to meet the three-day requirement, including when a change occurs that requires the three-day clock to be restarted. We still must work closely with you to ensure we have accurate information on this disclosure, and because of the early collaboration needed, we are hopeful that this will create a smoother closing for everyone.

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