I'm putting this in its own thread because the question has come up a few times in the middle of various threads over the last several weeks.

First, the TRID rules have not changed the basics of the Right to Rescind under section 1026.23. And they have not changed the general requirements under 1026.17(d) concerning which consumers get disclosures. So, what HAS changed?

1. For transactions that are not subject to the right to rescind, the old rules on distribution of disclosures is still in place. You need to provide a disclosure to any consumer who is primarily liable when there is more than one borrower. You can give a copy to more than one consumer in such cases, but you don't have to. 1026.17(d)

2. If the transaction is subject to the right to rescind, you need to provide a copy of the "material disclosures" to each consumer whose ownership interest in the real estate is or will be subject to the security interest. You also have to provide each of those same consumers with two copies (one, if delivered electronically in compliance with the E-SIGN Act) of the Notice of Right to Cancel.

3. Under TRID rules, what are the "material disclosures" that have to be given to each consumer with the right to rescind? They include:

• The disclosures required by 1026.19(f) -- the Closing Disclosure. (see Comment 17(d)-2).
• If the loan is a Higher Cost Mortgage Loan under 1026.32, the disclosures required by 1026.32(c)
• If applicable, the disclosures and limitations required under 1026.43(g)

4. What's the timing for delivery of the "material disclosures" to the consumers with a right to rescind?

• The Closing Disclosure for at least one of the primarily liable consumers has to be received no later than the third business day prior to consummation. Since there is no separate timing rule for delivery of the Closing Disclosure to other consumers with rescission rights, you should apply the same timing for them.
• If required, the disclosure under 1026.32(c) is required no later than the third business day before consummation.
• Therefore, it's wise to schedule delivery of all of the disclosures that have to be provided to a consumer with a right to rescind so they are received no later than the third business day before consummation.

5. The Loan Estimate is not required to be given to all consumers with a right to rescind. It only has to be provided to one of the consumers who is primarily liable.

6. Even when there is no right to rescind, if a non-borrowing consumer has ownership rights in the real estate being pledged, it's probably wise to provide a copy of the Closing Disclosure to him/her. Consider getting the borrower's permission to share the disclosure in such cases.

So the timing requirement does not apply to non-borrowing consumers with rescission rights?

There's no separate statement in the regulations concerning delivery timing under the rescission requirements. So I would interpret that to mean you have to conform to the same schedule that normally applies to the CloD. I have tweaked #4 in my list to reflect that.

I should add that the timing of the delivery of the Notice of Right to Rescind hasn't changed. It has to be received at or before consummation. If you provide it with the CloD, be very careful about how you complete the Right to Rescind notice, and I strongly recommend you do NOT use a form that includes an acknowledgment of receipt signature line, and probably add an instruction that clearly says "DO NOT SIGN this form unless you intend to cancel this transaction."

John, correct me if I'm misreading your comment but providing the rescission notice with the CD will not start the rescission period since consummation does not take place until at least 3 business days after the CD is provided. Since consummation would occur after the rescission notice was delivered the rescission period would end 3 business days after the date of consummation. [1026.23(a)(3)(i)]

I was NOT trying to suggest that the rescission period could start any sooner. If I left that impression, it's wrong. It can never start before the last of the three events: Notice of right to rescind, receipt of the CloD, consummation. I was trying to make sure that providing the rescission rights notice does not confuse the consumers into signing the form and giving it back at closing, signing the wrong line (for lenders who are still using the notice with receipt acknowledgment signature lines) or otherwise mucking things up.

Maybe I should simply have said that in order to reduce the chances for a consumer's misundertanding and misuse of the form, I recommend that it be provided at closing.

I'm curious if the thinking about providing the Closing Disclosure to a non-borrowing person is still that it should be provided three-business days in advance, same as a borrower, or if providing it at the closing table would be acceptable.

2. Multiple consumers. When two consumers are joint obligors with primary liability on an obligation, the disclosures may be given to either one of them. If one consumer is merely a surety or guarantor, the disclosures must be given to the principal debtor. In rescindable transactions, however, separate disclosures must be given to each consumer who has the right to rescind under § 1026.23, although the disclosures required under § 1026.19(b) need only be provided to the consumer who expresses an interest in a variable-rate loan program. When two consumers are joint obligors with primary liability on an obligation, the early disclosures required by § 1026.19(a), (e), or (g), as applicable, may be provided to any one of them. In rescindable transactions, the disclosures required by § 1026.19(f) must be given separately to each consumer who has the right to rescind under § 1026.23. In transactions that are not rescindable, the disclosures required by § 1026.19(f) may be provided to any consumer with primary liability on the obligation.

If they have the right to rescind they must receive the CD at least 3 business days before closing.

So, no different thinking then. Thanks for the confirmation Randy and Dan.