Critical Information on the Closing Disclosure and Federal Waiting Period


 

Critical Information on the Closing Disclosure and Federal Waiting Period

The information below is essential for all parties involved in a mortgage closing—borrowers, lenders, notaries, and signing services—to ensure compliance with federal law and protect consumer rights.

The Three-Business-Day Rule and Federal Law

Federal regulations under the TILA-RESPA Integrated Disclosure (TRID) Rule strictly mandate a three-business-day waiting period between a borrower's receipt of the final Closing Disclosure (CD) and the actual closing of the loan.

  • Violation of Federal Law: A lender is violating federal law if they attempt to close a loan less than three business days after the CD was delivered to the borrower.

  • Lender Penalties: Lenders that violate the TRID Rule face serious consequences, including penalties, fines, and legal action from regulatory bodies like the Consumer Financial Protection Bureau (CFPB). In some rare cases, the lender may even be forced to withdraw the loan commitment entirely.

Borrower Rights and What to Do

Borrowers have the right to ensure this waiting period is honored to fully review their loan terms and costs.

  • Right to Postponement: If the three-business-day window has not passed, the borrower has the absolute right to postpone the closing. They should never feel pressured to sign documents before they have received and reviewed the CD.

  • If You Haven't Received the CD:

    1. Request it immediately: Contact the lender and demand the document right away.

    2. Do Not Close: Do not sign any closing documents until you have received and had time to carefully review the Closing Disclosure.

Key Takeaways for Notaries and Signing Services

Notaries and signing services play a crucial role in upholding this compliance.

  • Verify Compliance: If a closing package arrives and it is clear the three-business-day period has not been met (and the borrower has not waived the period in certain limited, legitimate emergencies), the closing should not proceed.

  • Protect the Borrower: Your primary duty is to the integrity of the process. If a borrower expresses concern about not having received the CD on time or not having enough time to review it, you should halt the signing and advise them to contact their lender immediately.

  • Reporting: If a lender is unresponsive or insists on moving forward despite a clear violation, the borrower has the right to report the details to the Consumer Financial Protection Bureau (CFPB).

This federal rule is designed to prevent last-minute, harmful changes to loan terms and protect consumers during one of the most significant financial transactions of their lives. All parties must respect it.

To improve, gain more practice, and or build up confidence in notarizing documents joined one or all of our

notary continuing education training for North Carolina notaries throughout the year. Get more information

at, www.ncNotaryTraining.education. 

       

Legal Disclaimer: NC Notary Signing Services strives to provide precise and current information through our newsletters. However, the

contents are intended for informational purposes only and should not be construed as legal advice. We do not present

ourselves as attorneys and cannot assure the information's accuracy, completeness, or reliability. It is recommended to

consult a licensed attorney for legal matters. NC Notary Signing Services, its employees, or contractors will not be liable

for any claims, penalties, losses, damages, or expenses arising from or related to the use of information in our newsletters.

Notaries should seek guidance from their state’s notary authorities or legal advisors for legal queries. If any part of this

disclaimer is found to be invalid by a competent authority, the remaining sections will continue to be effective.

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