The wait is over: S. 2155 impact on revised closing disclosures

The recent passage of S. 2155 reduces the regulatory burdens involved in mortgage lending and helps credit unions offer lower rates to members by granting special relief from the 3-day waiting period after providing a revised Closing Disclosure (CD) that is required under certain circumstances. Before diving into these changes, let’s consider the current status quo:

12 C.F.R. §1026.19(f)(2). The rule also requires credit unions to permit the member to inspect the disclosures during this time. For most revisions, the 3-day waiting period does not have to be adjusted. However, there are certain changes to the CD that would require a new three-day waiting period before consummation. See, 12 C.F.R. § 1026.19(f)(2)(ii). These changes include any changes to the loan product type (i.e. adjustable rate, tiered rate, fixed rate, etc.), the addition of a prepayment penalty (although FCUs are prohibited from this), or if the annual percentage rate (APR) “becomes inaccurate” as defined under section 1026.22. We previously discussed changes to the APR and when it would be considered inaccurate for purposes of the revised CD requirements in this NAFCU blog post. Under this framework, it could be difficult for credit union members to accept a lower APR in the days leading up to closing because of the challenges presented by an additional 3-day delay and the highly specific arrangements that may be in place with the various parties involved in the mortgage transaction, including the credit union.  In other words, even though a lower APR benefits the consumer, a new 3 day waiting period could have negative implications such as with the sale agreement.

 

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