Nicholas Iarocci, Liberty Title & Escrow CompanyAs we all know, on October 3rd of last year, the Consumer Financial Protection Bureau (CFPB) instituted its well-publicized integrated disclosure law that had every lender, underwriter, and settlement services company in sheer panic mode. Many questions loomed, but most prevalent of all was the inevitable: How long will it now take to close? Nearly every industry expert told us that closing times would increase, and quite dramatically. Frankly, by a plain reading of the regulation, it would seem that they were indeed right. CFPB’s rule, in its simplest form, is that a borrower must receive the Closing Disclosure (CD) at least three days before consummation (signing of the lender note/contract, which occurs at closing). With this new reality, delivering the CD was, allegedly, a first step that bumps out settlement timeframes at least one week if regular mail was the chosen transmission method. However, this approach has essentially been abandoned in favor of a fully compliant exception, which is electronic delivery with digital signature (E-Sign).
While E-Signing has certainly cut down some closing delay, it is another, and arguably much less compliant method of disclosure, which has basically reduced national settlement times to Pre-TRID levels: sending the borrowers CD for electronic signature immediately after all annual percentage rate (APR) items are finalized. The methodology is that if APR financials are set in stone, no re-disclosure will be required. However, in the majority of cases, elements not linked to APR, such as payoffs for prior liens and imminently due taxes, are merely an estimate on a borrowers E-Signed CD. Those figures can drastically increase cash to close, because they often change from their initial number. If the amount in significantly rises, most borrowers will be understandably aggrieved, and that can produce uncomfortable questions.
Besides customer relations, the next question is legality. In other words, is it permissible to operate in this fashion? Implicitly, the answer seems be a resounding “No.” After all, CFPB was created for borrower protection, and to “Know Before You Owe.” With that in mind, it is reasonable to assume that all CD’s should be perfectly accurate when actually disclosed to borrowers. The regulations seem to not specifically forbid this operational scheme, but it does, at a minimum, go against the very essence of CFPB’s purpose.
In conclusion, until consent judgments or fines are handed out by government officials on this topic, the above will perpetually occur with larger lenders. Granted, in a perfect world, those aspects potentially changing the CD after disclosure should be long completed before a borrower can see their settlement statement, but there will be times when that, despite incredible employee efforts, is not possible.
Headquartered out of Warwick, R.I., Liberty Title & Escrow Company is a national settlement firm, with local title and closing services for both residential and commercial properties. Through our specialty in purchase transactions, we can accommodate all of your buying and selling needs, along with any future refinances.
Our approach utilizes traditional title and closing principals that emphasize attorney integration. Specifically, Liberty staff counsel will review your purchase and sale agreement, analyze title records, ensure complete accuracy of all lender documents, and attend your closing. After signing, all parties will receive a secured file for their records, and follow up call from the closing attorney.
In addition to process, our marketing department operates several unique platforms to assist relators, loan officers, and other clients in business generation. At Liberty, it is recognized that there are practical difficulties with sustaining a viable sales portfolio, and as such, it is our goal to be a fully compliant sales partner.
Nicholas Iarocci, Esq., is corporate managing attorney - Rhode Island at Liberty Title & Escrow Company, Warwick, RI