Information Center

Which loans are covered under the new law requiring the Closing Disclosure?

Most consumer mortgages. Exceptions include reverse mortgages, open-ended loans such as HELOCS, loans for business, commercial, or agricultural purposes, and loans made to other than natural persons.

If it is a cash deal, will the Closing Disclosure have only two pages? What if it is a commercial deal?

The Closing Disclosure is only required and designed to be used for transactions which include a mortgage. Commercial transactions are exempt from its required use if the mortgage loan is “primarily” for business, commercial or agricultural purposes.

Although there is no prohibition from using the Closing Disclosure for cash and commercial transactions, you may use any form you wish for those transactions including the custom settlement statements found in DoubleTime®, the new ALTA designed forms, or the original two-page HUD-1(1974 version).

Are time share sales covered by the new rules?

If the time share purchase includes a mortgage transaction which is considered to be a Covered Loan the new rules apply. However, the transaction is specifically exempted from having to comply with the three business day before closing rule related to delivery of the Closing Disclosure.

How will a reverse mortgage be reflected as loan amounts, interest rates and life of borrower are uncertain?

Reverse mortgages are not subject to the new TILA-RESPA Integrated Disclosure rules. Those loans will continue to be governed by Good Faith Estimates, HUD-1 settlement statements, and Truth in Lending disclosures.

Do we count Saturday when applying the mail box rule if the bank is closed on Saturday?

Yes, except for those occasions when your Saturday is one of the four federal holidays which falls on a day which floats from year to year (New Year’s Day, Independence Day, Veterans Day, and Christmas Day). In that case Saturday is not counted, but the day on which the holiday might be observed is counted even though government offices and banks are closed and regular mail service is suspended.

Other than the exception for federal holidays, it makes no difference if the bank is closed on Saturday as far as counting the days related to receipt of the Closing Disclosure including the mail box rule.

If a new service is requested after the Closing Disclosure has been delivered does a new Loan Estimate have to be given to the borrower?

Once a Closing Disclosure has been delivered there will never be another Loan Estimate. New services will be only be disclosed on the Closing Disclosure.

Can we provide a copy of the Closing Disclosure to realtors?

Realtors generally request signed HUD-1 closing statements for their files. Associations sometimes request them as well. Sharing the borrower’s CD with third parties, however, should be limited to those situations where you have both lender and borrower permission.

Unlike the HUD-1, the CD is created by the lender and the lender has ownership rights to it. For that reason, their approval is needed. In addition, since the CD contains far more Non-public Personal Information (NPI), caution should be exercised and borrower approval obtained before sharing it with others.

A better solution is to provide the seller’s CD which you will prepare. In the rare event the borrower has paid for all or part of the real estate brokerage services, get permission and provide the borrower CD; or provide your own combined settlement statement which only reflects settlement charges.

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