Iam often asked about corrections to the closing disclosure and if the threebusiness days applies to these changes. Below you will find that mosttypes of changes do not apply to the three business-day rule; however, payclose attention to the situations below that do require a corrected CD.
Pleasefeel free to email me with any questions regarding this @ april.roberts@fnti.com.
Corrected Closing Disclosures and the Three-Business Day Waiting PeriodBefore Consummation
If there is a change to the disclosed terms after thecreditor provides the initial Closing Disclosure, is the creditor required toensure the consumer receives a corrected Closing Disclosure at least threebusiness days before consummation?
ANSWER:
It depends on the type of change. As discussed below,there are three types of changes that require a creditor to ensure that theconsumer receives a corrected Closing Disclosure at least three business daysbefore consummation. For other types of changes, a creditor is not required toensure that the consumer receives a corrected Closing Disclosure at leastthree-business days before consummation, but is required to ensure that theconsumer receives a corrected Closing Disclosure at or before consummation.
A creditor must ensure that a consumer receives aninitial Closing Disclosure no later than three business days beforeconsummation. 12 CFR § 1026.19(f)(1)(ii)(A). If the disclosed terms changeafter the creditor has provided the initial Closing Disclosure to the consumer,the creditor must provide a corrected Closing Disclosure to the consumer.Unless the change is one of the three types of changes discussed below, it issufficient if the consumer receives the corrected Closing Disclosure at orbefore consummation. 12 CFR § 1026.19(f)(2)(i). This means that, for most typesof changes, the creditor can consummate the loan without waiting three-businessdays after the consumer receives the corrected Closing Disclosure.
However, the creditor must ensure that a consumerreceives the corrected Closing Disclosure at least three-business days beforeconsummation of the transaction if: (1) the change results in the APR becominginaccurate; (2) if the loan product information required to be disclosed underthe TRID Rule has become inaccurate; or (3) if a prepayment penalty has beenadded to the loan. 12 CFR § 1026.19(f)(2)(ii). Any of these three types ofchanges triggers a new three business-day waiting period, and the creditor mustwait three business days after the consumer receives the corrected ClosingDisclosure to consummate the loan.
More information on the timing requirements for providing initial ClosingDisclosures and corrected Closing Disclosures is available in Sections 11 and12 of the TILA-RESPA Rule Small Entity Compliance Guide .
