A new Loan Estimate document and Closing Disclosure form will be provided to customers in 2015 to comply with federal rules. The new Closing Disclosure in particular may cause changes in the way Notary signing agents conduct their assignments, and we’d like to hear thoughts, questions and concerns from signing professionals about this new form.
The Consumer Financial Protection Bureau published the final mortgage disclosure rule in November 2013 but delayed the effective date until August 1, 2015.
The new Closing Disclosure required by the rule combines information from the existing Truth-in-Lending (TIL) disclosure and the HUD-1 Settlement Statement, and must be delivered to borrowers at least three days prior to a closing.
Update 1-15-2015: One of the big questions in the mortgage lending community is who — the lender or settlement agent — will be responsible for completing and delivering the Closing Disclosure to borrowers.
We know that some of the major lenders plan to deliver the Closing Disclosure directly to the borrower. This will give these lenders greater control of their accountability for compliance under the new mandates.
However, it’s still unclear what the smaller lenders will do.
Some have asked if lenders might start using the new forms before August 1. Wells Fargo, one major lender that plans to deliver the Closing Disclosure directly to borrowers, said in a recent newsletter to its settlement agents that the new Loan Estimate and Closing Disclosure cannot be used prior to August 1. In fact, Wells said that there will be an overlap period of weeks or months when lenders will use both the old and the new forms.
The old forms will be used for loan applications submitted prior to August 1, and the new forms for application submitted after. “There are no exceptions to this requirement,” Wells noted.
Signing agents should be prepared for the transition in which they may handle loan signing document packages that have a Truth in Lending disclosure and HUD-1 Settlement Statement and those that have the new Closing Disclosure. Lenders and the settlement services industry are at work retooling their systems and signing procedures to accommodate the new form.
The Closing Disclosure raises other questions that may impact Notary signing agent assignments, including:
- What constitutes proof the borrower received the disclosure? Will the borrower have to sign the disclosure document to confirm receipt, and will signing agents play a role in verifying the borrower’s signature?
- If the Closing Disclosure must be received by the borrower three days prior to closing, will this document be sent to borrowers separately from the closing package for signatures? Or will lenders instead move to sending Closing Disclosure and loan document packages to borrowers early?
- Will Closing Disclosures use electronic signatures?
- Will lenders adopt standardized procedures for delivering Closing Disclosures or will they use different methods that affect the way signing agents must handle assignments for different companies?
We welcome feedback from our signing agent community on this developing issue. Please feel free to ask questions or post your thoughts on how the new Closing Disclosure document will affect you in the comments section below, on Facebook or in our LinkedIn discussion groups. We will continue to update and cover this ongoing issue for signing agent in the Notary Bulletin and The National Notary magazine as more information becomes available.
David Thun is the Assistant Managing Editor with the National Notary Association.