First Guaranty Mortgage Corporation - Compliance Department




Can a settlement agent provide the Closing Disclosure on the creditor's behalf?
 

Yes. Creditors may contract with settlement agents to have the settlement agent provide the Closing Disclosure to consumers on the creditor’s behalf. (§ 1026.19(f)(1)(v)). Creditors and settlement agents also may agree to divide responsibility with regard to completing the Closing Disclosure, with the settlement agent assuming responsibility to complete some or all the Closing Disclosure. (Comment 19(f)(1)(v)-4)

Any such creditor must maintain communication with the settlement agent to ensure that the Closing Disclosure and its delivery satisfy the requirements described above, and the creditor is legally responsible for any errors or defects. (§ 1026.19(f)(1)(v) and Comment 19(f)(1)(v)-3)

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 11.4

 
Who is responsible for providing the Closing Disclosure to a seller in a purchase transaction?
 

The settlement agent is required to provide the seller with the Closing Disclosure reflecting the actual terms of the seller’s transaction. (§ 1026.19(f)(4)(i))

The settlement agent may comply with this requirement by providing the seller with a copy of the Closing Disclosure provided to the consumer (buyer) if it also contains information relating to the seller’s transaction. (Comment 19(f)(4)(i)-1)

The settlement agent may also provide the seller with a separate disclosure, including only the information applicable to the seller’s transaction from the Closing Disclosure (§ 1026.38(t)(5)(v) or (vi), as applicable). (See form H-25(I) of appendix H to Regulation Z for a model form). However, if the seller’s disclosure is provided in a separate document, the settlement agent has to provide the creditor with a copy of the disclosure provided to the seller. (§ 1026.19(f)(4)(iv))

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 11.5

 
When does the creditor have to provide the Closing Disclosure to the consumer?
 

Creditors must ensure that consumers receive the Closing Disclosure no later than three business days before consummation. (§ 1026.19(f)(1)(ii)(A))

  • Consummation is the time that a consumer becomes contractually obligated on the credit transaction, and may not necessarily coincide with the settlement or closing of the entire real estate transaction. (§ 1026.2(a)(13))
  • For timeshare transactions, the creditor must ensure that the consumer receives the Closing Disclosure no later than consummation. (§ 1026.19(f)(1)(ii)(B))

Remember that business day is given a different meaning for purposes of providing the Closing Disclosure than it is for purposes of providing the Loan Estimate after receiving a consumer’s application. (See section 6.9 above describing definition of business day). For purposes of providing the Closing Disclosure, the term business day means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. (See §§ 1026.2(a)(6), 1026.19(f)(1)(ii)(A) and (f)(1)(iii))

This requirement imposes a three-business-day waiting period, meaning that the loan may not be consummated less than three business days after the Closing Disclosure is received by the consumer. If a settlement is scheduled during the waiting period, the creditor generally must postpone settlement, unless a settlement within the waiting period is necessary to meet a bona fide personal financial emergency. (§ 1026.19(f)(1)(iv))

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 11.7


May a consumer waive the three-business-day waiting period?
 

Yes. Like the seven-business-day waiting period after receiving the Loan Estimate (see section 9.6 above), consumers may waive or modify the three-business-day waiting period when:

  • The extension of credit is needed to meet a bona fide personal financial emergency. (§ 1026.19(f)(1)(iv));
  • The consumer has received the Closing Disclosure; and
  • The consumer gives the creditor a dated written statement that describes the emergency, specifically modifies or waives the waiting period, and bears the signature of all consumers who are primarily liable on the legal obligation. (§ 1026.19(f)(1)(iv))

The creditor is prohibited from providing the consumer with a pre-printed waiver form. (§ 1026.19(f)(1)(iv))

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 11.8

 
Does the three-business-day waiting period apply when corrected Closing Disclosures must be issued to the consumer?
 

Yes, in some circumstances. The three-business-day waiting period requirement applies to a corrected Closing Disclosure that is provided when there are:

  • Changes to the loan’s APR;
  • Changes to the loan product; or
  • The addition of a prepayment penalty.

If other types of changes occur, creditors must ensure that the consumer receives a corrected Closing Disclosure at or before consummation. (§ 1026.19(f)(2)(i) and (ii))

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 11.9


When must the settlement agent provide the Closing Disclosure to the seller?
 

The settlement agent must provide the seller its copy of the Closing Disclosure no later than the day of consummation. (§ 1026.19(f)(4)(ii))

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 11.10


Are creditors ever allowed to impose average charges on consumers instead of the actual amount received?
 

In general, the amount imposed on the consumer for any settlement service must not exceed the amount the settlement service provider actually received for that service. However, an average charge may be imposed instead of the actual amount received for a particular service, as long as the average charge satisfies certain conditions. (§ 1026.19(f)(3)(i)-(ii); Comment 19(f)(3)(i)-1)

An average charge may be used if the following conditions are satisfied (§ 1026.19(f)(3)(ii)):

  • The average charge is no more than the average amount paid for that service by or on behalf of all consumers and sellers for a class of transactions;
  • The creditor or settlement service provider defines the class of transactions based on an appropriate period of time, geographic area, and type of loan;
  • The creditor or settlement service provider uses the same average charge for every transaction within the defined class; and
  • The creditor or settlement service provider does not use an average charge:
  • For any type of insurance;
  • For any charge based on the loan amount or property value; or
  • If doing so is otherwise prohibited by law.

If the creditor develops representative samples of specific settlement costs for a particular class of transactions, the creditor may charge the average cost for that settlement service instead of the actual cost for such transactions. An average-charge program may not be used in a way that inflates the cost for settlement services overall. (Comment 19(f)(3)(ii)-1)

Creditors should consult the commentary to § 1026.19(f)(3)(ii) for additional guidance on using average-charge pricing. (See Comments 19(f)(3)(ii)-1 through -9)

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 11.11


 
 
TRID Resource Center
First Guaranty Mortgage Corporation®
This email is for information purposes only and should not be construed as legal or compliance advice.
Visit my LinkedIn ProfileVisit my LinkedIn Profile


The Change Agent of the Mortgage Industry
 
Click here to unsubscribe.
Equal Housing Opportunity Mortgage Bankers Association Member Inc 5000 -
Powered by:  
Vango
This information is solely for mortgage professionals and should not be provided to consumers or third parties. FGMC is a mortgage lender and is not affiliated with, working on behalf of or at the direction of the FHA, VA, USDA or the federal government.
 
Please consider the environment before printing this email.
 
This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to which they are addressed. If you have received this email in error, please note that any use, copying or distribution of this e-mail, in whole or in part, is strictly prohibited. Please notify the sender by return e-mail of the error and delete this e-mail from your system. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.