TRID Closing Disclosure and the Customer Signature

Inquiry/Issue

The Bank is working with a title company that does not require a signature on the Closing Disclosure when it is provided to the borrower at least three business days before closing.  However, at closing, the title company is requiring a signature on the exact same Closing Disclosure.  Is this process correct? If the Bank requires a signature on the initial Closing Disclosure which is provided three business days before closing, is it still required to provide a Closing Disclosure at closing?

Response Summary

Under Regulation Z, the creditor has the option of obtaining the consumer’s signature to confirm receipt of the Closing Disclosure, but a statement must appear on the disclosure that the signature only confirms that the consumer has received the form and that it is not an acceptance of the loan. If the creditor has provided the Closing Disclosure prior to consummation in a timely manner and there are no changes between then and the closing, there is no requirement to provide an additional copy of the form.

Response Detail

The creditor may include a line for the signature of the consumer to confirm receipt of the Closing Disclosure. If such a line is included, the creditor must also include a statement that the signature only signifies receipt of the Closing Disclosure. §§1026.38(n)(1), 37(n)(1).

Whether a signature line is included on the Closing Disclosure is solely at the creditor’s discretion, but if it is included, then it must be accompanied by the statement. Official Interpretations, ¶37(n)(1)-1.

In the model form appearing in H-24, there is a signature block on the fifth page of the disclosure with the heading, “Confirm Receipt.” The signature line for the applicant and co-applicant has the following language above it:

By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form.

The creditor may use the consumer’s name under the signature line, rather than “Applicant” or “Co-Applicant,” as on the model form. Official Interpretations, ¶37(n)(1)-2.

If the creditor does not include the statement and line for the consumer’s signature, a statement must be added to the “Other Considerations” box of the Closing Disclosure:

You do not have to accept this loan because you have received this form or signed a loan application. §§1026.38(n)(2), 37(n)(2).

These are the only provisions of Regulation Z concerning whether or not a signature should be obtained on the Closing Disclosure.

As to providing the Closing Disclosure, Regulation Z requires that the consumer receive it no later than three business days prior to consummation. §1026.19(f)(1)(ii). Assuming that there are no changes affecting the closing disclosure between the date it is delivered and the date of the actual closing, no additional Closing Disclosure is needed.

With respect to the Bank’s questions:

• If the title company and Bank require the consumer’s signature on the Closing Disclosure, it should use the format of the model form when the Closing Disclosure goes out (NOTE: if the loan may be sold on the secondary market, the Bank should consider the requirements of the investor).
• After the Closing Disclosure is provided to the consumer prior to consummation, there is no requirement to provide an additional Closing Disclosure, barring any changes between the date it is delivered and the date of closing.

 

This entry was posted on Monday, November 2nd, 2015 at 2:00 pm.