I recently sat in on MDIA and new REG Z requirements training. The person conducting the training made the statement that ALL consumers that have an interest in the property being refinanced should receive ALL PTIL disclosures(not just Right of Rescission).

Does any one have comments or maybe some clarification on this. I understand the ROR, but have some questions on all the other PTIL and TIL requirements.

Reg. Z Section 226.23(a)(3) and the Commentary state that "delivery of all material disclosures" is a prerequisite for starting the rescission period. The footnote in this paragraph describes what is meant by "material disclosures". Previously, this basically just referred to the final TIL disclosures because you would almost never have needed to give an Advance TIL (under Section 226.19(a)) on a rescindable loan. But under the new rules, the Advance TIL will need to be given even on rescindable loans, so it would appear that this disclosure would also fall under the definition of material disclosures.

Refer to footnote 48:

48 The term "material disclosures" means the required disclosures of the annual percentage rate, the finance charge, the amount financed, the total of payments, the payment schedule, and the disclosures and limitations referred to in Sec. Sec. 226.32(c) and (d) and 226.35(b)(2).


Early disclosures would not be included.

I thought the same thing, Randy, until I read the materials from the Lending Compliance Triage Conference. The handout entitled "Who Gets What?" states that a copy of the "early TIL disclosure in a transaction that involves the right to rescind must be provided to EACH consumer" but that the "early TIL disclosure in a transaction that does NOT involve the right to rescind must be provided to ANY consumer." Thoughts?

Basically, what I am hearing is that if more than one consumer(by REG Z definition) is involved in a purchase, the disclosures can be sent to the person that is primarily liable on the obligation. However, in the case of a rescidnable transaction(under 226.23) all the disclosures must be sent to all consumers who has an interest in the property. This at times could be hard to determine at application(no title committment yet).

What if we have the other consumer(s) sign a quit claim deed at closing, would that be ok and would it work to justify not having sent the whole 'bundle' of disclosures over and over?

I'm just not sure.

That is true, but early disclosures are still not material disclosures for the right of rescission.

What is the basis, then, for why each borrower would need to receive the early disclosures in a rescindable transaction? Is there something else that I'm overlooking that would trigger this?

226.17(d)

Only those consumers who are subject to the ROR. I could have an interest in the property but if it's not my primary residence then I'm not subject to the ROR and you would not have to provide me my own copy of the ETIL.



It's the loan officer's responsibility to interview the applicants and obtain applicable information. How the property is titled would, IMO, be applicable information to obtain at application. The title commitment, like verification of employment, would just verify the information.



I don't understand this question, but if you are asking what I think you are....then you better hope I never become an examiner and examine your bank....I would most definitely consider that a UFAD practice and an intentional circumvention of the regulation.

Information purposes because they are putting their primary residence up as collateral. Read the commentary:

Material disclosures. Footnote 48 sets forth the material disclosures that must be provided before the rescission period can begin to run. Failure to provide information regarding the annual pecentage rate also includes failure to inform the consumer of the existence of a variable rate feature. Failure to give the other required disclosures does not prevent the running of the rescission period, although that failure may result in civil liability or administrative sanctions.

Then read the notice.

You have a legal right under federal law to cancel this transaction, without cost, within three business days from whichever of the following events occurs last:

(1) the date of the transaction, which is ________; or
(2) the date you received your Truth in Lending disclosures; or
(3) the date you received this notice of your right to cancel.

This all refers to the Final TIL disclosures.

Dan and Randy, Thanks for clearing this up for me. I hadn't thought about 226.17(d), but after reading it, I see clearly see now why that triggers the need to provide each applicant who has the right to cancel with their own copy of the early TIL. Thank you very much.

Thanks everybody! Also, it is important to know state law regarding who has property rights...in some states you don't have to be married to the "owner" in order to have ownership interest in the property.

What if we have the other consumer(s) sign a quit claim deed at closing, would that be ok and would it work to justify not having sent the whole 'bundle' of disclosures over and over? (This not what we do,just a question that I was asked and needed a good back-up opinion to give.) Thanks!

I gave you an opinion on this a few posts back in this thread.




Nope, the disclosures are required to be given to all consumers who have the right to rescind within 3 business days of the application, or if redisclosure is required at least 3 business days before the loan closes. So having them sign away their property rights to cover up your failure to comply with the law at closing will not negate your disclosure violation.

I guess the ABA is taking a different stance on this?, or am I misinterpreting? Per the Common Questions on MDIA: http://www.aba.com/members+only/regulatory/cl_mdia_tilafaqs.htm

Who must receive the disclosures under the new TILA requirements?

The answer depends on whether the loan is a rescindable transaction. In accordance with 226.17(d), if there is more than one borrower, the disclosures may be made to any borrower who is primarily liable on the obligation. However, if the transaction is rescindable, the disclosures must be made to each person who has the right to rescind.


To me, they're making it clear that non-borrowers with a rescindable interest must receive the PTIL.

I believe everyone is saying the same thing in this regard. As always, any one who owns the property and lives in the property (primary dwelling) has the right to rescind (regardless of whether they are a borrower or not). Because they are entitled to the right to rescind, the consumer must be given two copies of the Right to Cancel notice as well as a copy of the TILA disclosures (Section 226.17(d)). (Also, see the definition of "consumer" contained in Section 226.2(a)(11).) Previously, you wouldn't generally have given an advance TIL disclosure on a rescindable loan, but now that the advance TIL disclosure must be given on essentially all dwelling-secured loans, the advance TIL disclosure is required in connection with rescindable loans as well. Therefore, the advance TIL disclosure must also be provided to each person who has the right to cancel. Being a borrower is not a requirement to receiving the Right to Cancel or the disclosures (in a rescindable transaction.)