By: Elva Coffey-Sears
We’ve all been focusing on the implementation of the new Loan Estimate and Closing Disclosure, but we mustn’t lose sight of the other disclosures impacted by the TILA-RESPA Integrated Disclosure rule. Here at ABS, we recommend including these disclosures in your pre-implementation training and testing.
TRID added a new disclosure that must be provided prior to the cancellation of an escrow account established in connection with a closed-end credit transaction, other than a reverse mortgage, that is secured by a first lien on real property or a dwelling. While the rule exempts escrow accounts that were established solely in connection with a consumer’s delinquency or default and the cancellation of an escrow resulting from a pay-off of the mortgage, the disclosure requirement applies to all escrow accounts without regard to when the account was established.
The regulation requires the consumer receive the “Escrow Closing Notice” no later than three business days prior to closing an escrow account in response to a customer’s request and no later than 30 business days prior to an account closure for any other reason. If the notice is not provided in person, the “mailbox rule” applies. Specifically, the consumer is considered to have received the disclosure three business days after it is delivered or placed in the mail. Thus, in most cases, the notice will have to be provided no later than six business days prior to a customer-initiated closure and no later than 33 business days prior to a creditor-initiated closing.
The Escrow Closing Notice is required to:
- Contain the specific information detailed in 12 CFR 1026.20(e)(2) and may contain some or all of the optional information detailed in 12 CFR 1026.20(e)(3)
- Be clear, conspicuous and readily noticeable to the consumer
- Be separate from all other materials, appear on the front-side of a one-page document, and be written in at least a 10-point font
- Display headings, content, order and format substantially similar to the model form appearing in Appendix H
TRID also expanded the content and covered transactions of the Regulation Z Mortgage Transfer Disclosure. Under current rules, this notice is required for any consumer credit transaction that is secured by the principle dwelling of a consumer.
After August 1, 2015, a covered transaction will include:
- An open-end credit transaction secured by the principal dwelling of a consumer
- A closed-end transaction secured by a dwelling or real property
The content of the mortgage transfer disclosure remains the same except that an additional disclosure relating to partial payment policy is required for a closed-end consumer transaction secured by a dwelling or real property (other than a reverse mortgage). This partial payment disclosure is the same as required on page four of the Closing Disclosure and the Small Entity Compliance Guide (page 87) which states you can modify that language to suit the format of the mortgage transfer notice.
