RSK.IQ Question of the Week 7/18/16
How Soon can a Closing Disclosure be Provided After a Revised Loan Estimate?
Issue/Inquiry
Under the TRID Rules, if a revised Loan Estimate is issued on Thursday, July 7th, what is the earliest date that the Closing Disclosure can be provided?
Response Summary
The revised version of the Loan Estimate cannot be provided on or after the date on which the Closing Disclosure is provided. The revised version must also be provided at least four business days prior to consummation. If there are less than four business days prior to the scheduled date of consummation, the revised disclosures can be reflected in the Closing Disclosure, rather than in a revised Loan Estimate.
Response Detail
The TRID rules prohibit a creditor from providing a revised version of the Loan Estimate on or after the date on which the creditor provides the Closing Disclosure. The consumer must also receive a revised version of the Loan Estimate no later than four business days prior to consummation.
If the revised version of the Loan Estimate is not provided to the consumer in person, the consumer is considered to have received it three business days after the creditor delivers or mails it. If, however, there are less than four business days between the time the revised version of the Loan Estimate would be provided and the scheduled date of consummation, creditors will be in compliance with the disclosure requirements of the TRID rules if the revised disclosures are reflected in the Closing Disclosure. Official Interpretations, ¶1026.19(e)(4)(ii) – 1.
This means that if the Bank provides a revised Loan Estimate to the consumer in person on Thursday, July 7th, the Closing Disclosure can be provided on any day after July 7th. If the revised Loan Estimate is mailed on July 7th, the consumer will be deemed to have received it on Wednesday, July 11th. In that case, the Closing Disclosure can be provided on any day after July 11th.
Whether the Bank will want provide a revised Loan Estimate will be affected by the timing requirements related to the consummation of the loan. For example, if the revised Loan Estimate is given to the consumer in person on July 7th, the loan cannot close before Wednesday, July 11th, four business days after the revised version has been provided. If the closing has been scheduled for Tuesday, July 10th, the Bank would not provide a revised Loan Estimate, but would have the revised disclosures incorporated in the Closing Disclosure.
Note: The Closing Disclosure must be provided at least three business days prior to consummation. If the Closing Disclosure is subsequently revised, some revisions (i.e., the APR becomes inaccurate, the loan product changes, or a prepayment penalty is added) may require the closing to be re-scheduled, in order to accommodate the three business day period, but others will not. 12 CFR §1026.19(f)(1)(i).
This entry was posted on Monday, July 18th, 2016 at 3:00 pm.