Five Things Lenders

Need To Know Before October.

Five things to know
Who will prepare the new Closing Disclosure?

The new CFPB rule provides that the lender is ultimately responsible for preparation of the CD. However, the rule also allows the lender to delegate some or all of the preparation to the settlement agent. Determining which system will create the final form is important in establishing workflows for the transfer of information.

Who will deliver the Closing Disclosure?

The rule contains a requirement that the borrower receive a copy of the CD three days prior to “consummation” (most often the date of signing loan documents). Similar to preparation of the new CD, the new rule allows for a settlement agent, at the lender’s discretion, to deliver the CD to the borrower. We are gearing up to provide compliance information regarding delivery, but some lenders, as a result of compliance concerns, may opt to deliver the CD themselves. Again, impacts to workflow will occur based upon the decision regarding delivery.

How Will the Timing Of A Closing Be ImpactedBy Closing Disclosure Delivery?

Not all information on the CD is contained in a single system. As a result, we need to decide how to exchange the information needed to complete the CD. Some lenders have indicated this “collaboration” process will occur electronically, while others may need to rely on a less automated approach.

Who will make changes to the ClosingDisclosure?

Changes to numbers contained on the initial CD may occur prior to closing, necessitating adjustments, re-printing and delivery of the corrected CD at signing. It is important to consider and decide if the party that prepared the initial CD will also make the changes for an amended CD? In addition, we need to discuss whether settlement agents can make some changes to a lender-prepared CD?

Changes to the settlement numbers on the CD may also occur after the closing (for example if there are changes to recording fees). While documentation of such changes currently falls to the settlement agent in the preparation and delivery of an amended HUD-1 settlement statement, for transactions processed under the new Rule, lenders will need to arrange for the preparation and delivery of such amended documentation.

How will settlement agents communicate title and settlement fees?

Lenders will continue to need accurate estimates of title and settlement fees for the preparation of both Loan Estimate and CD. In addition, for transactions in which an owner’s policy will be purchased, the new rule prescribes special mathematical calculations for disclosure of the owner’s and lender’s title insurance premiums, which may require receipt of rates for both a stand-alone and simultaneously-issued lender’s policy, as well as the owner’s policy rate. We are modifying our online rate calculators to assist in these calculations and make these disclosures smooth and easier to distribute and understand.

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