VIDEO: Requiring a Signature on the LE or CD
In this Compliance Clip (video), Adam answers the question of whether a financial institution can require a customer to sign and return an LE or CD. This topic is actually based off a new TRID FAQ that was released last quarter, and will be included in our upcoming Quarterly Compliance Update.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about requiring a signature on the Loan Estimate or the Closing Disclosure. The question we have here is, “Can a creditor require a consumer to sign and return the Loan Estimate or Closing Disclosure?”
Our answer to this is actually going to come from the new TRID Frequently Asked Questions that were released by the CFPB last quarter. This is actually a topic that will be covered in our upcoming Summer 2020 Quarterly Compliance Update as we will cover all of the new TRID Frequently Asked Questions. Now, the answer to this question on whether or not a creditor can require a consumer to sign and return a Loan Estimate or Closing Disclosure is from the CFPB. They say that it depends. They say that while the TRID Rule does not require consumers to sign the Loan Estimate or Closing Disclosure, the rule does provide creditors the option to include a line for consumer signatures to acknowledge receipt of the form. A creditor may include the signature line and require the consumer to sign the disclosure but only if the consumer also receives a copy of the disclosure in a form that they may keep. Now, the consumer must have the ability to retain a copy of the disclosure after returning the signed disclosure to the creditors.
Obviously, the piece here that is key is you can require them to sign it but the key piece to this is they must have a copy that they can keep. So if you're only giving them one copy, they have to sign it and return it, that is a problem, and you end up violating TRID rules on not providing the Loan Estimate or Closing Disclosure to the customer. If you're an auditor and you're looking at your processes and you do see a signature line where the customer has signed the Loan Estimate or Closing Disclosure, you really need to see that there is a way that the bank or financial institution is evidencing the fact that they have also provided a copy to the consumer. Hopefully there's a checklist that says the consumer received the copy and kept the signed copy for the bank or something like that to differentiate that process. The best way is to have some sort of documented checklist, but we really need to make sure that the consumer is getting that copy that they can keep.
That's what the rule says and that's all I have for you in this Compliance Clip.