Frequently Asked Questions

Know Before You Owe (KBYO or TRID)

Categories:

Loan Estimate – Timing and Consumer Receipt

As the creditor (lender) you will need to ascertain any applicable information and/or documentation, as applicable, from your business partners since you are ultimately responsible for the compliance of the disclosures issued. See also the question above regarding who must receive the Loan Estimate.

There could be. In terms of the Loan Estimate no, as long as the adverse action notice has been provided to the consumer. However, there are disclosures specific to timing related to the presentation of an application form (Example: ARM disclosures – unless a nonrefundable fee has been collected first in which it would have to be given at that time; Affiliated Business Arrangement Disclosure, if applicable; etc.), and various other state required disclosures that must be provided prior to or at the time of completion of the application rather than within the three business day time period. You should consult with your compliance expert or attorney regarding the specific programs, products and states to ascertain the appropriate disclosures for your organization.

It depends on whether you are talking about the Loan Estimate or the Closing Disclosure.

Loan Estimate: If there is more than one consumer then the Loan Estimate may be provided to any consumer who is primarily liable on the obligation. If one consumer is merely a surety or guarantor then the Loan Estimate must be given to the principal debtor.

Closing Disclosure: In contrast to disclosure of the Loan Estimate the Closing Disclosure must be provided to each consumer who has the right to rescind in rescindable transactions.

The new forms are driven via an Application date, so if a creditor provides a Good Faith Estimate (application received prior to 10/3/2015) then closing documents would be HUD-1 and Final TIL. If the Application is received 10/3/2015 or after then a Loan Estimate and Closing Disclosure would be provided for most closed-end loans secured by real property.

Yes, the creditor (or mortgage broker – see above) must deliver or place in the mail the Loan Estimate no later than the seventh [specific] business day before consummation of the transaction.

Example:

  • Deliver or Mail on Monday, June 1
  • Consummation may occur on or after Tuesday, June 9
  • Assume Saturday is business day for this example

If there is more than one consumer the Loan Estimate may be provided to any consumer who is primarily liable on the obligation. If one consumer is merely a surety or guarantor then the Loan Estimate must be given to the principal debtor.

In contrast to current disclosure requirements regarding the TIL Disclosure Statement (which continues to apply to those non-applicable transactions in which the TIL is still used), and in contrast to disclosure of the Loan Estimate, the Closing Disclosure must be provided to each consumer who has the right to rescind in rescindable transactions.

Regulation Z provides that if any disclosures required are not provided to the consumer in person then the consumer is considered to have received the disclosures three specific business days after they are delivered or placed in the mail. The creditor may, alternatively, rely on evidence that the consumer received the disclosures earlier than three business days. For example, if the creditor sends the disclosures via overnight mail on Monday and the consumer signs for receipt of the overnight delivery on Tuesday then the creditor could demonstrate that the disclosures were received on Tuesday.

Yes, if a creditor delivers the Loan Estimate to a consumer via email, but the creditor did not obtain the consumer’s consent to receive disclosures via email prior to delivering the disclosures, then the creditor does not comply with both the required form (§1026.37(o)(3)(iii)) and timing requirements (§1026.19(e)(1)(iii)), assuming the disclosures were not provided in a different manner.

Yes, see the previous question above regarding the use of electronic delivery.

Yes, see the previous question above regarding the use of electronic delivery.

Yes, in terms of the 3-day mailbox rule. The creditor may rely on evidence that the consumer received the emailed disclosures earlier. For example, if the creditor emails the disclosures at 1 p.m. on Tuesday and the consumer emails the creditor with an acknowledgement of receipt of the disclosures at 5 p.m. on the same date then the creditor could demonstrate that the disclosures were received on the same day. Creditors using electronic delivery methods, such as email, must also comply with §1026.37(o)(3)(iii), which provides that the Loan Estimate may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. For example, if a creditor delivers the Loan Estimate to a consumer via email, but the creditor did not obtain the consumer’s consent to receive disclosures via email prior to delivering the disclosures, then the creditor does not comply, assuming the disclosures were not provided in a different manner in accordance with appropriate timing requirements.

Yes.

Example 1: If creditor sends the Loan Estimate via overnight mail on Monday and consumer signs for receipt on Tuesday, the creditor can demonstrate the Loan Estimate was received on Tuesday.

Example 2: If creditor emails the Loan Estimate at 1 pm on Tuesday and the consumer emails creditor an acknowledgement of receipt at 5 pm on the same day, the creditor can then demonstrate that the Loan Estimate was received on the same day. Creditors using electronic delivery methods must also comply with 1026.37(o)(3)(iii), which provides that the Loan Estimate may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. For example, if the creditor delivers the Loan Estimate to a consumer via email but did not obtain the consumer’s consent to receive disclosures via email prior to delivering the Loan Estimate, then the creditor does not comply with 1026.37(o)(3)(iii), and the creditor does not comply with 1026.19(e)(1)(i), assuming the Loan Estimate was not provided in a different manner in accordance with the timing requirements of 1026.19(e)(1)(iii).

If not provided in person, receipt is assumed 3 [specific] business days after providing the disclosure by:

  • Mail delivery
  • Overnight Mail (FedEx, UPS)
  • Electronic delivery
  • Facsimile

No, not in terms of time of providing the Loan Estimate. However, see questions below regarding "receipt" of the disclosure by the consumer. In terms of providing the Loan Estimate, the creditor shall deliver or place in the mail the Loan Estimate not later than the 3rd general business day after the creditor (or mortgage broker) receives the consumer’s application.

The date the mortgage broker receives the application. There is only one application date per transaction.

If a mortgage broker receives a consumer’s application either the creditor or the mortgage broker may provide a consumer with the Loan Estimate. If the mortgage broker provides the Loan Estimate, the mortgage broker shall comply with all relevant requirements. The creditor shall ensure that the Loan Estimate is provided in accordance with all requirements. A Loan Estimate provided by a mortgage broker in accordance with the requirements satisfies the creditor’s obligation. If a mortgage broker provides a Loan Estimate, the mortgage broker shall also comply with the recordkeeping/ retention requirements under §1026.25(c).

Effective on October 3, 2015, no later than three business days after the date the interest rate is locked, the creditor shall provide a revised version of the Loan Estimate to the consumer with the revised interest rate, the points disclosed, lender credits, and any other interest rate dependent charges and terms.

You should refer to the specific state laws and regulations in this case, as well as your compliance expert or attorney. However, for purposes of federal compliance it would not be considered a general business day unless your offices are open to the public for carrying on substantially all of your business functions.

See the previous question.

Saturday would be considered a general business day if your offices are open to the public for carrying on substantially all of your business functions. You should consult your compliance experts or attorney to determine your business days for purposes for these requirements.

It depends on whether you are talking about a general or specific business day.

If general, for timing of initial issuance of the Loan Estimate, it would depend on whether your company is open for a substantially all of your business functions.

If specific business day such as for waiting periods after issuance of the Loan Estimate or Closing Disclosure, counting dates regarding "receipt" by the consumer, or for purposes of rescission the observed date of the holiday would apply. In this case, if measuring receipt, then Friday (July 3rd) would be treated as a business day for purposes of the specific business day definition, and Saturday, July 4 would be treated as the holiday.

General Business Day (for purposes of the question "creditor’s business day"):
A day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.

Business Functions – availability of personnel to:

  • make loan disbursements
  • open new accounts
  • handle credit transaction inquiries
A creditor is not open for substantially all of its business functions due to:
  • merely accepting credit cards for purchases
  • customer-service window open only for limited purposes
    • deposits and withdrawals
    • bill paying
    • related services
Federal (Specific) Business Day:
All calendar days except Sundays and the legal public holidays specified in 5 U.S.C. § 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.



Four Holidays Identified by a Specific Date:

January 1 New Year’s Day
July 4 Independence Day
November 11 Veteran’s Day
December 25 Christmas Day

No. There is no cure for timing of disclosure issuance, once you have the 6 items defined as an application the clock starts regarding the three (general) business days regarding providing the Loan Estimate without violating provisions under §1026.19(e)(1)(iii)(A). You could also have issues with selling the loan in the secondary market with a mortgage in violation of disclosure delivery timing.

The creditor shall deliver or place in the mail the Loan Estimate no later than the third [general] business day after receipt of the consumer’s application. If a mortgage broker receives a consumer’s application, either the creditor or the mortgage broker shall provide a consumer with the Loan Estimate.

Example:

  • Application received Monday, June 1
  • Deliver or Mail on or before Thursday, June 4


Disclaimer: The following information is intended for general information purposes with the goal of assisting ICE Mortgage Technology’s customers in complying with the new KBYO regulations. This information is provided as a courtesy to ICE Mortgage Technology’s customers and ICE Mortgage Technology makes no representation or warranty regarding the accuracy of the information set forth herein, and you may not rely on this information to ensure your company’s compliance with the KBYO regulations. This FAQ should not be construed as legal advice or opinion on any specific facts or circumstances, including the application of the KBYO regulations. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with all applicable laws and regulations.