|Article by: Ben Giumarra, Spillane Consulting Associates
A couple of forms you might not need anymore. Plus a note on one mortgage lender’s death penalty from a CFPB enforcement action.
Here at SCA we’ve been fighting a war to help shrink, update, and simplify loan files. This is a war where battles are fought one page, sometimes one sentence, at a time.
Bloated loan files decrease borrower satisfaction and increase uncertainty (sometimes confusing ourselves). The good news here is that there is always PLENTY of things that can be cut out of a standard loan file package — and imagine the time savings with even removing one form. One less form to have signed. One less form to chase down (when it’s not signed). One less form that needs to be scanned. One less form that needs to be discussed with an auditor. And on and on.
So what’s on the chopping block for today?
Servicing Disclosure Statement
This is a disclosure that advises the borrower, among other things, that the lender may assign, sell, or transfer servicing after closing. Here’s a picture of a standard format for one.
If you still include this in your loan files, you can get rid of it. Unless the loan is exempt from TRID and you’re not using the Loan Estimate/Closing Disclosure, the TRID disclosures replaced the Servicing Disclosure Statement and this has long since been unnecessary to include.
But Distinguish: The “Notice of Servicing Rights” disclosure has not been replaced and still needs to be provided to the borrower 15 days before transfer or at closing (so most lenders choose closing). Where the Servicing Disclosure Statement (should be removed) tells the borrower servicing might be transferred, this Notice of Servicing Rights tells the borrower that servicing actually has been transferred. So don’t get rid of this one!
Extra Rescission Notice with E-Disclosure
Every consumer always needs an extra rescission notice–meaning we give each consumer two copies of the same disclosure–right? Actually, no. Where you provide the rescission notice electronically (in compliance with E-Sign), you only need to give one copy to each consumer. For reference read the rule at 1026.34(b)(1).
Note: Even when sent electronically, each individual consumer still must receive a separate copy. But since it’s electronic, they only need to receive one each, not two.
In Other News
Thank you to Ben Giumarra, Spillane Consulting Associates, Inc., a member of our Education Committee, who with the support of other experts at SCA have put together this newsletter.