CFPB: THE CLOSING DISCLOSURE STATEMENT AND THE THREE DAY DELIVERY REQUIREMENT PROPOSAL

The Consumer Financial Protection Bureau “CFPB” has proposed a Three Day Delivery Requirement rule with respect to the issuance of the new Closing Disclosure Statement form to borrowers. The Closing Disclosure Statement is the new name for the integrated HUD-1 Settlement Statement and Truth In Lending Act “TILA”. The Three-Day Requirement rule is being proposed because the CFPB wants to try and eliminate the opportunity for some in the industry to spring new fees or charges onto the unsuspecting consumer at the closing table. The CFPB also believes the Three-Day Requirement rule will give borrowers more time to educate themselves about their transaction.

The Three-Day Delivery Requirement proposal mandates The Closing Disclosure Statement be delivered to and recieved by the borrower in most residential closed-end mortgage transactions at least three days prior to the consumation of the transaction. The Three-Days are calculated as three “Business Days” which are defined as all days except for Sunday and legal Federal holidays.

If during the Three-Day Delivery before the but before the scheduled closing date, a fee or charge that the borrower will pay increases or decreases the borrower must be given a new updated Closing Disclosure Statement form and wait three additional business days before consumation of the transaction.

ยง 1026.19(f) on page 738 of the Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) proposal states “the creditor shall ensure that the consumer recieves the disclosures required under paragraph (f)(1)(i) of this section no later than three business days before consumation.”

The CFPB is proposing that delivery of The Closing Disclosure Statement must be provided to the borrower either: (1) in person, (2) by mail/Federal Express/courier, or (3) by email at least three business days prior to the closing.

Does the CFPB allow for exemptions to the Three-Day Delivery Requirement proposal? YES. There are five exemptions.
1. Changes due to Seller-Borrower negotiations. An example would be if the borrower discovers an issue during the walk-through and the Seller-Borrower agree to a monetary credit.

2. The minor cost increase of up to $100.00 in aggregate.

3. The change in Government fees.

4. Inadvertent or technical error that does not involve numerical disclosure error.

5. Bona Fide Personal Financial Emergency:
If a borrower wants to waive the waiting period they must show a legitimate personal financial emergency in order waive this requirement but they can only waive this requirement after they have recieved The Closing Disclosure. The borrower also must provide the creditor with a date written detailed statement describing the emergency which requires them to waive the Three-Day Delivery Requirement such as a natural disaster or imminent foreclosure sale. One important aspect to the exemption waiver is the CFPB will not accept pre-printed or printed forms to be used for this exemption.