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Thursday, February 6, 2014

E-Delivery of RESPA and TILA Disclosures to Multiple Applicants

We are a lender that initially attempts to e-mail disclosures to our loan applicants. Our e-delivery system requires the applicant to consent to e-delivery before the disclosures can be opened. If the applicant responds “yes”, the disclosures are opened. If there are co-applicants and we receive consent to e-delivery from one applicant, but not the second, is that sufficient for compliance with disclosure requirements under the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending Act (“TILA”)?

With respect to TILA disclosures, generally, when there are multiple applicants, the disclosures may be made to any applicant “who is primarily liable on the obligation”. [12 CFR 1026.17(d)] However, when there is a right to rescind (such as a refinance), the disclosures “shall be made to each consumer who has the right to rescind”. [12 CFR 1026.17(d)] So, if the transaction is a refinance, all applicants must consent to the e-delivery in order for the lender to be in compliance.

With respect to RESPA disclosures, the answer is not as clear cut. Regulation X, the implementing regulation of RESPA, simply states that “the lender must provide the applicant with a GFE”. [12 CFR 1024.7(a)] The term “applicant” is not defined. Thus, the conservative approach is to give the GFE to each applicant, which under your delivery system, will require each applicant to consent to e-delivery before opening the documents.

Additionally, although not part of your initial questions, note that with respect to notifications under ECOA and Regulation B, in the case of multiple applicants, notifications only need to be given to one applicant, but “must be given to the primary applicant where one is readily apparent”. [12 CFR 1002.9(f)]

Joyce Pollison
Director/Legal & Regulatory Compliance
Lenders Compliance Group