Wells Fargo announced that effective August 1, 2015 it will control the generation and delivery of the borrower’s Closing Disclosure form in anticipation of the TILA-RESPA Integrated Disclosure Rule. The new Closing Disclosure is a mix of the existing Truth-in-Lending (TIL) disclosure and the Settlement Statement (HUD-1). Wells Fargo stated in the Wells Fargo Settlement Agent Communications newsletter on September 24, 2014 they will be taking over this process in order to meet internal compliance and governmental regulator compliance expectations on the bank.
Wells Fargo said the reason they will be delivering the Closing Disclosure Form is because they want to maintain evidence the borrower received the disclosure at least three days prior to the closing since this is a critical compliance requirement they must meet. The bank disclosed that having readily accessible data for internal and external compliance audits was another major reason for this decision.
Wells Fargo disclosed that their view under the new rules is “…that the settlement agent continues to be responsible for the Seller’s information and will prepare and deliver the Seller’s Closing Disclosure. A copy must be provided [by the Settlement Agent] to Wells Fargo for our loan file in order to comply with the final rules.”
One of Wells concerns in the newsletter is back to back closings or in situations where you have multiple closings all connected with different lenders and settlement agents which would encounter problems if the first closing experiences a disclosure form problem and a re-disclosure is required.
We are expecting numerous other banks and lenders to announce that they will also be generating and delivering their own Closing Disclosure forms due to litigation risks and enforcement concerns stemming from the RESPA-TILA Integrated Disclosure rules. How will this play out with Unauthorized Practice of Law (UPL) concerns? The Consumer Financial Protection Bureau appears to be ready to take on this issue and claim federal preemption in favor of the lending industry.