Who needs to get the Loan Estimate? The Closing Disclosure?
Who-specifically- needs to receive the Loan Estimate and Closing Disclosure where there are multiple borrowers?
Seems pretty basic, right? Maybe. Maybe not. If you're curious, though, here's the answer ...
Multiple Borrowers that Share Primary Liability
Who receives the LE and CD where there are co-borrowers, e.g., husband and wife?
Loan Estimate:
Either co-borrower must receive the LE, and either borrower can give intent to proceed. Both co-borrowers do not need to receive separate disclosures.
Closing Disclosure:
Same rule. Delivery of CD should be made to either co-borrower.
Multiple Borrowers, One as Surety or Guarantor
What about where there are multiple borrowers, but only one with primary liability, and another as surety or guarantor?
Loan Estimate:
The borrower with primary liability must receive the LE and give intent to proceed.
Closing Disclosure:
Same rule. The borrower with primary liability must receive the CD.
Borrower Plus Non-Borrower on Title
What if there is one borrower but another person living on title? For example, if a wife refinances her house, taking out the mortgage in her name only, although her husband lives in the home? In other words- what if there is a non-borrower with a Right of Rescission?
Loan Estimate:
Only the borrower needs to receive the Loan Estimate. The non-borrower does not need to receive it.
Closing Disclosure:
Any person with a right of rescission must receive the CD separately. So in our refinance example above, both the husband and wife would need to receive the CD (before the 3-day TRID clock starts ticking). And both need to receive it separately- so if they share an e-mail account, that's two e-mails with the same disclosure; one addressed to Mrs. Smith, and another to Mr. Smith.
There's been some confusion and debate around this issue, so maybe you don't want to just take our word for it. That's okay! We can explain where we got this from if you REALLY want to know.
First look at 12 CFR 1026.2(11)-- that defines "consumer." Then look at the Official Interpretations to 12 CFR 1026.17(d)-2.-- that specifically says that, in rescindable transactions everybody with a right to rescind needs to get the Closing Disclosure separately. It also says specifically that in non-rescindable transactions, the Loan Estimate and Closing Disclosure can be given to either borrower.
Then there's a gap in our research- there does not seem to be any written Rule where it specifically says that a Loan Estimate does not need to be given separately in rescindable transactions. So why do we believe that to be true? Look at the CFPB's official preamble to the TRID Rule on p. 664-65. There the CFPB recognizes that it would be too difficult for us to know (at the time of the Loan Estimate) who has the right of rescission because we haven't run a title search. (True!) Therefore, the CFPB explains that it wrote rule 12 CFR 1026.37(a)(5) to only require the actual borrower's name and address because it will not require the Loan Estimate to be delivered to non-borrowers with the right of rescission.
In other news:
Whether you're blue collar, or blue blood, getting up early and being productive in the a.m. is a sign of hard work, and of success. Have you heard of the "R.I.S.E." advice? Some basic things for a better morning: Refrain from hitting snooze, Increase your activity in the first hour (exercise), Shower, Expose yourself to sunshine, Upbeat music (listen to it), and Phone a friend (talking to someone forces you to be alert).
You see that the CFPB settled the case against Honda for fair lending violations in its indirect auto lending platform for $24 million? What does this mean for other lenders?
Nice story about one of those rare millennials who owns a home
Lots of mortgage regulations apply where a "security interest" is taken in "real property"--but what if you make a loan secured by something that is built into the home? Water treatment system? Solar panels? According to this recent court case, it looks like these regulations would NOT apply ... good news!
Training a new recruit on HMDA? Or explaining to a loan officer why his/her discretion to set pricing has to be limited? Sometimes it helps to have the background facts. So when you're explaining the history of discrimination in the housing industry that led to all these fair lending regulations, here is some trivia to help:
Realtors. From 1924 to 1950 the code of ethics for the NAR stated: "A realtor should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality, or any individual whose presence will clearly be detrimental to property values in the neighborhood."
Appraisers. Even in 1977 the American Institute of Real Estate Appraisers officially recommended factors such as "prevailing nationalities, infiltration" and examples such as "The neighborhood is entirely Caucasian. It appears there is no adverse effect by minority groups."
FHA. Even FHA! A Columbia professor (Charles Adams) once stated that the FHA had "set itself up as the protector of the all white neighborhood." And back in 1938, the FHA underwriting manual read as follows: "Areas surrounding a location are to be investigated to determine whether incompatible racial and social groups are present, for the purpose of making a prediction regarding the probability of the location being invaded by such groups. If a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally contributes to instability and a decline in values."
And we can't forget ourselves (lenders). Even when lenders haven't engaged in discriminatory lending practices directly, they've still been targeted because they're in a position to help. Anyone remember the "politically explosive" Boston Fed preliminary report that was leaked to the Boston Globe in 1989? The headline read "Inequities Are Cited in Hub Mortgages: Preliminary Fed finding is racial bias." Now, the Boston Fed later issued a more careful final report (the preliminary report was never officially released to the public), which specified that this all may not have been the fault of lenders, but said bluntly, "even if the disparities in mortgage activity were not the fault of lenders, banks and thrifts would be expected to help correct the situation." Why was lending activity low in African American and low-income areas? It was not shown to be intentional. But lending standards were tight -banks were requiring debt-to-income ratios of 25-28 percent. But rent was high--Boston renters were easily paying more than 40% of their income on housing costs. Banks also closed 40% of branches between 1978 and 1988 in predominantly minority areas of Roxbury, Mattapan, and Dorchester. And you remember what happened - there was public outcry, immense debate, the Charles Stuart situation, and out of that came an agreement by New England banks to take corrective actions. They opened more branches in certain areas. Some affordable housing projects were pushed forward. And we also got Massachusetts Housing (no, that MassHousing, Massachusetts Housing Investment Corporation, MHIC).
For cites on all these facts, and for more information, check out From Redlining to Reinvestment. Community Responses to Urban Disinvestment (c) 1992, edited by Gregory D. Squires.
"Kindness is our power, even when fondness is not."
- Samuel Johnson
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**These are our opinions. We're not authorized, or willing, to express those of others.**