The revision and improvements in the disclosure form requirements has given the opportunity to moneylenders for improving mortgage-closing process. The proposal from Consumer Financial Protection Bureau in this regard also contains a provision wherein the delivery of this new Closing Disclosure has to be done three days prior to loan closing. This will allow the inclusion of additional disclosures at the same time.
The moneylenders now have a great opportunity to present closing documents upfront along with a complete review in those three days.
The documents that can be delivered are:
● Disclosures that are state specific
● Notifications for servicing transfer
● Notices that are investor specific
● Other documents (required with promissory note, mortgage or deed of trust)
The 60% to 70% content in the closing package can be transferred to this new form and can be electronically signed. According to the current regulations, the borrowers are allowed to review HUD-1 disclosure one day before loan closing. The three days time will allow them to review their loan terms closely before making the transaction.
We have also noted that some borrowers find it difficult to go through every page of the documentation in a very short period of time. They are not able to understand the transaction. The three days time will help them in understanding the documentation and loan closing.
According to CFPB, the borrowers should have enough time to review, question and analyze every point in the disclosure. This will help them to understand the transaction by the time they are required to obligate themselves.