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Notary Signing Agents Face Longer Closing Disclosure Transition Due To CFPB ‘Grace Period’ Announcement

New TRID rule will not be enforced during CFPB’s grace period

UPDATE 6-18-15: Signing Agents across the nation could see a mixed-bag of inconsistent loan document packages — some with the new Closing Disclosure and some continuing to include the older documents —  between October 1 and the new year as the federal government has granted the mortgage industry a “grace period” to fully implement the TILA-RESPA Integrated Disclosures (TRID) rule.

The new mortgage disclosure rules were originally scheduled to take effect August 1. However, CFPB Director Richard Cordray announced that the agency was proposing to push back the deadline to October 1. The delay would allow the agency to correct an administrative error, Cordray said in a statement.

The postponement follows the CFPB announcement of a “grace period” for enforcement of the new rules at the request of industry leaders. This means that agency will take into account the good faith efforts of financial institutions to implement the rules before pursuing enforcement actions for lenders which are out of compliance.

How The 'Grace Period' Affects Signing Agents
 

But the grace period, which is expected to last until the end of 2015, means that NSAs could continue to see two different types of loan packages: one with the old Truth-in-Lending (TIL) disclosure and HUD-1 Settlement Statement; the other with the new Closing Disclosure form. For loan signings with the old packages, NSAs also could deal with borrowers who have had little time to go over the documents.

During this transition period, signing agents will need to be familiar with the loan packages prepared under the old rules as well as the new rules.

The TRID rule is intended to make it easier for borrowers to understand the terms of their loans by consolidating key information. The part of the rule that will affect NSAs is the Closing Disclosure, which combines information from the TIL disclosure and HUD-1 form.

TRID also mandates that borrowers receive the Closing Disclosure three days before the borrower signs the mortgage note. This is intended to give borrowers more time to review their loan terms before a closing — a change that many Notary signing agents hope will make the loan document signing process more efficient and reduce questions and issues borrowers may have with their loan documents during signing assignments.

Why New Mortgage Disclosure Enforcement Is Being Delayed
 

Lenders and financial institutions had asked the CFPB for the grace period to help companies deal with the impact of these major changes to the closing process. CFPB Director Richard Cordray stated in a letter to two U.S. senators that the new rules will still go into effect as planned on August 1. However, when it comes to enforcement actions against lenders who are out of compliance, Cordray noted that the agency “will be sensitive to the progress made by those entities that have focused squarely on making good-faith efforts to come into compliance … on time.”

“We share your desire for a smooth and successful implementation of the Rule, and we continue to work closely with all stakeholders to support that goal,” Cordray wrote.

Mortgage Bankers Association President and CEO David H. Stevens described the grace period as a “win-win” for both industry and consumers.

“With so many difficulties around integrating systems, the industry needs flexibility to ensure consumers do not incur costs or lose home sales due to unforeseen problems,” Stevens said.

NNA members can read a detailed look at the possible impact of the new TRID rules on signing agents in the June 2015 issue of The National Notary magazine.

David Thun is an Associate Editor at the National Notary Association.

7 Comments

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Roberta Casha

15 Jun 2015

I would like to know if the TRID changes (lets say the "Closing Cost"-Lender Credits" ") will the Lender need to redisclose and add another 3 days for the borrower to review the document?

Linda

15 Jun 2015

Questions: Which of the two documents are the borrowers to receive 3 days before signing, the TIL/HUD-1 or the new Closing Disclosure? What happens if the borrowers have not received it when the Agent goes for signings?

National Notary Association

17 Jun 2015

Hello. For most closed-end mortgage loans originated on or after August 1, the Closing Disclosure must be delivered to the borrower three days prior to consummation or closing. “Consummation” is the date the borrower signs the Note. Closing Disclosures are not sent for HELOC and reverse mortgage loans, as well as loans in which the structure is not secured to land (mobile home). These types of loans will continue to use the TIL/HUD-1. Companies assigning loan signing appointments to NSAs will be able to schedule appointments with NSAs in advance, since lenders must have the Closing Disclosures prepared at least 6 days prior to consummation or closing. Lenders will be able to track delivery and receipt of the Closing Disclosure, so it is not anticipated there will be a problem that will lead to a delay of the signing for loans in which a Closing Disclosure is required. If a borrower hasn’t received a Closing Disclosure at the time the NSA shows up for the loan signing, the borrower should contact the lender. A greater concern is what happens if any of the information in the Closing Disclosure delivered to a borrower changes after delivery and receipt. This would trigger the need for a new Closing Disclosure and delay the consummation or closing by an addition 3-day period.

Trevia Irvin

15 Jun 2015

whats the point of showing this if your blocking it off so we can't read it!

National Notary Association

16 Jun 2015

Hello Trevia. We're not blocking our articles in any way-they are open to the public for reading. If you are having an issue viewing an article, please email us at social@nationalnotary.org to describe the problem you are having and we'll be happy to try and help you. If possible, please let us know what kind of device and browser you are using to try and view the article also.

Audrey Jane Spaulding

16 Jun 2015

I think this is going to make a Notary's life much simpler. It will be so much better if the Borrower has a chance to see what the rate is and how the Loan will process three days a head of the scheduled Closing. This makes for a smoother Loan Process and also no surprises for the Borrower.

jay

28 Sep 2015

This change seems as though it will reduce the time of completing notaries as borrower will have read documents prior to notarys arrival

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