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Thursday, February 16, 2017

Consumer Signatures

QUESTION
We are constantly worrying about getting consumer signatures on our TRID disclosures. In fact, we are unsure of signatures on several consumer disclosures. It seems like a minefield at times to determine if we should be getting disclosures signed. Here’s our question: what are some of the disclosures that we need to get signed by the consumer?

ANSWER
Actually, this question comes up more often than you might expect. At Lenders Compliance Group, we get this question regularly, especially when there is a transition to a new disclosure protocol. It can be confusing. I will outline here a few disclosures on which consumer signatures may or may not be required.

·         Loan Estimate (initial or revised):
o   Not required. Optional. [1026.37(n)(1) & (2)]
·         Closing Disclosure:
o   Not required. Optional. Signature(s) for documenting receipt of the Closing Disclosure is at the lender's option, in order to evidence receipt by borrower three (3) business days prior to closing. [Commentary ¶37(n); Commentary ¶38(s)]
·         Loan Estimate with signatures versus Intent to Proceed:
o   Signature(s) for confirming receipt of the Loan Estimate may not be used as replacement for signature(s) required by Intent to Proceed. [§1026.37(n); 78 FR 79813]
·        Closing Disclosure (non-borrowing spouse) three (3) business days prior to closing and at closing:
o   Not required. Optional. Signature(s) for documenting receipt of the Closing Disclosure is at the lender's option, in order to evidence receipt by borrower three (3) business days prior to closing. [Commentary ¶37(n); Commentary ¶38(s)]

There are many caveats, but here are a couple to consider. You should determine if consumer signatures are required by a specific loan program or investor. Also, the Loan Estimate or Closing Disclosure can be transmitted in accordance with E-Sign compliance standards; but, there is no regulatory requirement that either the Loan Estimate or the Closing Disclosure must actually contain signature(s). [§1026.37(o)(3)(iii); §1026.38 (t)(3)(iii); 15 USC 7001 et. seq.] To appropriately implement the E-Sign process for consumer signatures, and to review other caveats, it is a good idea to seek the guidance of a compliance professional.

Jonathan Foxx
Managing Director
Lenders Compliance Group