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Post Close CD Timing Requirements

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  • #36112
    aschliebe
    Participant

    I have read 1026.19(f) & commentary and am having a hard time following what types of post close changes must be issued within 30 days of discovery and which can be issued 60 days of discovery. The examples seem to jump back and forth.

    We are trying to determine the amount of time we have to review seller CDs to our borrower CD after closing. Generally there is not change to the costs incurred by our borrower but numbers do change on the seller CD from what were initially told frequently and we issue a post close CD to our borrower. Most common changes involve prorations paid by the seller (HOA dues, water/sewer, taxes) and seller paid title fee changes (courier fees, wire fees, etc.).

    Thank you!

    #36155
    jholzknecht
    Keymaster

    First let me explain the difference between the 30- and 60-day periods.

    If during the 30-day period following consummation an event occurs that causes the CD to become inaccurate, and results in a change to an amount actually paid by the consumer from that amount disclosed in the CD then deliver or place in the mail corrected disclosures not later than 30 days after receiving information sufficient to establish that such event has occurred.

    If during the 30-day period following consummation an event occurs that causes non-numeric clerical errors then deliver or place in the mail corrected disclosures not later than 60 days after consummation.

    An error is considered clerical if it does not affect a numerical disclosure and does not affect requirements imposed by § 1026.19(e) or (f).
    • For example, if the disclosure identifies the incorrect settlement service provider as the recipient of a payment, then § 1026.19(f)(2)(iv) requires the creditor to deliver or place in the mail corrected disclosures reflecting the corrected non-numeric disclosure no later than 60 days after consummation.
    • However, if, for example, the disclosure lists the wrong property address, which affects the delivery requirement imposed by § 1026.19(e) or (f), the error would not be considered clerical.

    The above rules apply to changes that occur after consummation, such as recording fees.

    In your case, it appears that incorrect numbers appear on the borrower’s CD prepared by the bank. Those numbers are different than the numbers that appear on the CD prepared by the settlement agent and provided to the seller. For such an error you should correct the disclosure before consummation.

    This problem is eliminated if the lender, as required by Regulation Z, prepares the CD and delivers it to the borrower at least three business days before consummation and to the settlement agent for delivery to the seller at closing. Then there is a single CD.

    #36156
    aschliebe
    Participant

    Thank you Jack!

    Following up on your reply. We double check the signed seller CD against ours when we receive them from the settlement agent (we don’t get the final Seller CD until after consummation). About 50% of the time they are different than what we received prior to closing – most of the time minor items that do not impact the borrowers fees/obligations but they require us to update our CD and send a revised copy to the borrower.

    • This reply was modified 5 months, 2 weeks ago by aschliebe.
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