What are the common causes and consequences of closing disclosure errors? (2024)

FAQs

What are the common causes and consequences of closing disclosure errors? ›

One of the most common causes of closing disclosure errors is human errors. These can include typos, miscalculations, incorrect information, missing signatures, or miscommunication between the lender, the title company, the real estate agent, and the borrower.

What if There are Errors or Discrepancies in the Closing Disclosure? If you notice any issues on your Closing Disclosure, contact your lender immediately to get them corrected. It may delay your closing if there is a material change in the costs. It's crucial if you want to avoid issues down the road.

If you find an error in one of your mortgage closing documents, contact your lender or settlement agent to have the error corrected immediately. Common errors in your documents can be as simple as a misspelled name or a wrong number in an address, or as serious as incorrect loan amounts or missing pages.

An error is considered clerical if it does not affect a numerical disclosure and does not affect other requirements imposed by the regulation. Example: If the Closing Disclosure identifies the incorrect settlement service provider as the recipient of a payment, then the error would be considered clerical.

As discussed in the FAQs above, if the APR disclosed pursuant to the TRID Rule becomes inaccurate, the creditor must ensure that a consumer receives the corrected Closing Disclosure at least three business days before consummation of the transaction. 12 CFR § 1026.19(f)(2)(ii).

The lender is primarily responsible for its accuracy and timely delivery to the borrower, while the title agent assists in gathering specific information and may handle both the buyer and seller's side of the disclosure.

What happens after receiving the Closing Disclosure, the borrower usually has a mandatory waiting period to review the document before the loan can proceed to closing. During this period, they can ask questions and seek clarification from their lender or closing agent.

It is possible for your lender to find a last-minute red flag and back out of the contract. In other words, getting denied after the Closing Disclosure is issued is possible. This is why it is important to make sure there are no major changes to your credit or income during this period.

Yes, the Closing Disclosure form can change after signing. These changes can be due to adjustments in prorations, title fees, or other costs. If there are significant changes, a new disclosure will be required and the closing may be delayed.

Alerting your lender to the errors may delay closing, but it's vital to get any discrepancies cleared up before signing. If changes need to be made, you have 3 additional business days prior to closing to review the revised Closing Disclosure.

What is an example of a clerical mistake? ›

For example, a clerical error can be omitting an appendix from a document, typing an incorrect number, mistranscribing a word, or failing to log a call.

Clerical errors in judgments, orders, or other parts of the record may be corrected by the court at any time on the court's own motion or on motion of any party and may be entered nunc pro tunc.

When a post-consummation event requires a corrected Closing Disclosure, the creditor must deliver or place in the mail a corrected Closing Disclosure not later than 30 calendar days after receiving information sufficient to establish that such an event has occurred.

If an event occurs within 30 days after the consummation date, and that event causes the Closing Disclosure to become inaccurate in a way that results in a change to an amount actually paid by the consumer, the credit union can mail a corrected Closing Disclosure to the borrower.

What is a “changed circ*mstance” for purposes of providing a revised disclosure and resetting tolerances? An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction (A natural disaster, such as a hurricane or earthquake).

Exceptions to the Closing Disclosure Requirement

Exceptions include: Reverse Mortgages: Borrowers receive a HUD-1 Settlement Statement and a final Truth in Lending Disclosure instead. Home Equity Lines of Credit (HELOCs): Typically, borrowers receive a Truth in Lending Disclosure but not a Closing Disclosure.

Clear-to-close buyers aren't usually denied after their loan is approved and they've signed the Closing Disclosure. But there are circ*mstances when a lender may decline an applicant at this stage. These rejections are usually caused by drastic changes to your financial situation.

The three tolerance buckets are zero tolerance, 10% tolerance and unlimited tolerance. The official definition of “in good faith,” as interpreted for TRID, is that due diligence is exercised to gather information that is reasonably available.

Substantive changes are less likely but can certainly still happen even after initial signing. Any significant alterations do require the lender to issue an updated Closing Disclosure with an additional mandated 3-day waiting period before closing.

If you modify the amount of your down payment. If you change the loan product. If the home you're buying appraises at a value different than expected. If there's a change in your credit or the lender cannot verify income.