So what is a lender's obligation regarding the Seller's Closing Disclosure?
Here are some fast facts on a topic where lenders are currently all over the map.
Both borrower and seller need to receive a Closing Disclosure. Most lenders have decided to require that closing attorneys prepare and deliver a separate version of the Closing Disclosure specific to sellers (dubbed the "Seller's CD"). This is for privacy, among other reasons. (If you're not concerned about privacy, the perfectly legitimate alternative is to have the closing attorney simply deliver a copy of the full Closing Disclosure.)
What the Rule Says
The TRID Rule makes closing attorneys responsible for providing a CD to the seller. That's right, not lenders!
Under TRID, the lender's only express obligation is to keep a copy of the Seller's CD where the closing attorney delivers the separate Seller's CD instead of just providing a copy of the full CD.
The Rule does not expressly require lenders to:
Verify the accuracy of the Seller's CD
Verify its timeliness
Get a signature
Important Note: Even if you take this literally, this does not mean seller- specific fees are irrelevant to the lender. The Lender still needs plenty of seller fees for other portions of the CD. For example, the lender is responsible for disclosing seller credits, adjustments, and arguably closing costs paid by the seller such as real estate commissions.
Side Note: How does the ALTA Settlement Statement play into all of this? It doesn't. The ALTA has no effect on the requirement to deliver the Seller's CD. The ALTA is recommended in addition to the CD.
Beyond the Rule (Suspicions)
So just reading the rule, our obligation appears to end there - just to collect a copy of the CD. But having been burned times before (see Duplicate Discharge issue) and held accountable for the actions of vendors like attorneys, we just struggle to take this at face value.
So we do nothing when a Seller's CD is materially incorrect?
We do nothing when we have proof that the Seller's CD was not delivered in time??
We think what it boils down to is this (at least until we have more clarity from regulatory examinations): Inform closing attorneys that you expect to receive a copy of the Seller's CD signed at closing that is accurate. Check the Seller's CD during your regular audit process of the Integrated Disclosures (it's a helpful check to make sure the lender's own fees are correct anyway). Report back to the closing attorney if there are serious errors with just a general statement - "there appears to be serious errors with the Seller's CD that the Bank requests be fixed and a revised Seller's CD be delivered to the seller within 30 days." Maybe (hopefully) this proves overkill.
In Other News:
Check out my new monthly article in the Banker & Tradesman premiering February 8th ... hey maybe if you help me get enough "clicks" they'll extend me beyond the trial stage!
Anyone else think it is bizarre for Amazon to be opening a series of brick and mortar bookstores? Hey "technology is cyclical," right? (beeper salesman in 30 Rock).
Intriguing read on cyber-security in the most recent FDIC Supervisory Highlights letter.
On My Mind ...
A U.S. Navy Admiral was attending a naval conference that included Admirals from the U.S., English, Canadian, Australian and French Navies.
At a cocktail reception, he found himself standing with a large group of officers that included personnel from most of those countries.
Everyone was chatting away in English as they sipped their drinks, but a French admiral suddenly complained that, whereas Europeans learn
many languages, Americans learn only English.
He then asked, "Why is it that we always have to speak English in these conferences rather than speaking French?"
Without hesitating, the American Admiral replied, "Maybe it's because the Brit's, Canadians, Aussie's and Americans arranged it so you wouldn't have to speak German."
"There must be a happy medium between being totally informed and blissfully unaware."
- Doug Larson
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