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.
If 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.
As the real estate community makes the transition to the new rules and new forms set forth by the CFPB beginning October 3, there will be a short period where pre-existing escrow transactions will close using the HUD-1 Settlement Statement and new transactions will use the new Closing Disclosure Form.
The Loan Application Date is the Determining Factor
The key factor in determining which form will be used is the date of the loan application.
In other words, transactions with loan applications made before October 3rd will use the HUD-1 Settlement Statement and transactions with a loan application date after October 3rd will use the new Closing Disclosure.
Which form will be used?
Be sure to notify us of the date of the loan application when you place your Title & Escrow order.
Loan Application Before October 3
Transactions with a loan application made before October 3 will use the HUD-1 Settlement Statement.
Loan Application After October 3
Transactions with a loan application made after October 3rd will use the new Closing Disclosure Form.
Communication is Key
Let us know the date of the loan application at the time an order is placed with us. This is the best option for a seamless, smooth transaction. If you don’t have a loan application date at the time of opening, please let us know as soon as you do so that we may ensure that the proper forms are used and your transaction is smooth and successful.
Ticor is your CFPB Readiness Partner
Regardless of the date of the Loan Application, we are prepared to serve you and dedicated to your successful transaction.
A plain-english guide to the Consumer Financial Protection Bureau. You’ll find simple answers about the CFPB and how the new rules will change real estate transactions. To download a PDF, click here.
The CFPB Loan Estimate Form
The new Loan Estimate form replaces the early TILA disclosure and the Good Faith Estimate. It lists all the potential costs for the consumer’s loan like title insurance, percentage rates, closing costs, and the estimated monthly loan payment.
Creditors are responsible for calculating the best estimates possible for these services, which will be checked against the actual costs listed in the Closing Disclosure form when the loan is consummated. And unlike the former Good Faith Estimate, creditors can no longer revise and re-disclose if charges go up or down prior to closing. After all, resetting the estimate every time a circumstance changes weakens the purpose of the estimate!
Once a consumer’s application is received, the creditor has three days to deliver the Loan Estimate and should include a list of providers for services the consumer can shop around for.
Ticor is your CFPB Readiness Partner
Forms, dates, rules, and laws… it can seem like a lot to take in. The good news is that we’ve done our homework and we’re here to guide you through.
To learn more about how the CFPB changes impact you, contact a local representative.