So far I haven't seen anything that prohibits send the Loan Estimate and the Closing Disclosure together, but maybe I missed something obvious?

There is definitely a prohibition against sending the LE and CD together.
You MUST send the LE the day before the CD.
You can google it with bankersonline at the end of your question and find a thread that will have the citation.

Thanks. I didn't see the citation in Z yet.

It can go out the next day, but not same day.

1026.19(e)(4)(ii) Relationship to disclosures required under § 1026.19(f)(1)(i).

The creditor shall not provide a revised version of the disclosures required under paragraph (e)(1)(i) of this section on or after the date on which the creditor provides the disclosures required under paragraph (f)(1)(i) of this section. The consumer must receive a revised version of the disclosures required under paragraph (e)(1)(i) of this section not later than four business days prior to consummation. If the revised version of the disclosures required under paragraph (e)(1)(i) of this section is not provided to the consumer in person, the consumer is considered to have received such version three business days after the creditor delivers or places such version in the mail.

Sorry, I don't see where it says that they can't be sent together as that is discussing revised disclosures, or am I missing it?

There's a 7 business day wait from delivery of the initial LE to consummation; so that would be your prohibition against sending out an initial LE and CD on the same day.

The LE must be sent at least 7 business days before closing. I see nothing in the rule that would prevent the lender from sending both the original LE and the original CD on the same date, which would have to be at least 7 days before closing. But I see no reason why a lender would want to do that.

I don't think it was anticipated by the CFPB that lenders would want to do so; i think the part of the regulation quoted above about revised LE's having to precede the CD by at least a day shows the intent of the CFPB on the issue--that is, that the last LE (whether it's the initial one or a later revised one) must happen at least a day prior to the CD.

It is because the CFPB never contemplated that a lender would ever consider doing such a thing as then you are then going to be issuing revised CDs. I think you are looking at a UDAAP and a regulatory violation because your initial CD was issued so early, it would not be deemed issued in good faith. You can't possibly know the exact costs of a loan at the time of the LE being issued, or you are playing games with the application date.

In reality, sure you can! At least on in-house refinances, you absolutely can. But it would just seem silly to mail an LE with a CD. It just wouldn't feel right. I have done a few next day though.

In-house refinances may be the exception, though even with those how will you for surely know the exact amount a 3rd party would charge for a settlement service?

Bottom line, the initial LE is an "estimate," hence the word Estimate after Loan. The CD is supposed to disclose the actual costs and workings of the transaction.

Yes, we do know the exact costs when we issue the LE and CD, and very rarely ever have to reissue / send a revised CD. We do so many that we have the costs nailed down, so it's not a guessing game.

I still haven't seen where it's documented that we cannot send them together. Does anyone have a Reg citation that addresses this?

It's rare that you would have a 3rd party fee to concern yourself with on a community bank in-house loan. Like MB...we could easily do both at once.

MB I don't have a citation and haven't had a concern since I can close easily by sending out next day if they want to close within 6 of the appraisal and 7 of the LE, but if you find one...be sure and report back, now I'm curious! !

If a revised one (which is done after an initial LE) can't be sent the same day as a CD, then de facto, the initial LE can't be sent out the same day either.

As i stated above, i agree with Justin.

This is exactly what I predicted in a couple of private exchanges once the CFPB issued their proposal to allow the tolerance baselines to be reset with the CD. That banks such as MB's would basically issue an initial LE to comply with 1026.37 and then immediately issue a CD and start using it as an LE to reset tolerances for changed circumstances basically making revised LEs obsolete.

It is my opinion the proposal doesn’t give you, or is not intended to, the green light to start using the CD as the LE for changes once the initial LE is issued. The purpose of this revision is to allow the lender to reset their baseline if an unexpected circumstance comes up before the set closing date that is outside the lender’s control and it is too late to issue a revised LE.

The overzealous of issuing the CD before the loan is even approved will eventually bring additional oversight on us. As a couple of posters have mentioned I see UDAAP issues just waiting to happen. The most prevalent one I think will be the claims of bait and switch.

To use a an example we discussed here. CD is issued. Appraisal comes in 2 weeks later at a lower value and now you have to add points due to the LTV. IMO this is not a changed circumstance because knowing the value of the property before issuing the CD is well within the bank's control but I know some of you will treat it as a changed circumstance and revised the CD with the added points. By doing so you leave the borrower, in a purchase transaction, very little choice to back out of the deal because they will lose their deposits and possibly the house they are wanting to purchase because you switched terms on them just a few days before the set closing. It's basically not feasible for them to back out and start over with a new lender.

While the timing requirements in the reg for the initial LE 19(e)(1)(iii) and the initial CD 19(f)(1)(ii) don't express any prohibition on "delivering" these disclosures simultaneously; the Bureau has expressed in the preamble that it is addressing this question with 19(e)(4)(ii) , the prohibition on providing a "revised LE" on the same day as a CD.

The Bureau probably should have included a "Relationship to disclosures required under § 1026.19(f)(1)(i)" part to the timing requirements of the initial LE like it did for the Revised LE. Still, the Bureau expresses here in the Preamble that it is proposing 19(e)(4)(ii) to prohibit creditors from providing a consumer with estimated costs (initial or revised LE) and actual costs (CD) at the same time. Even though 19(e)(4)(ii) that the Bureau provides specifically talks about a "revised LE"...the Bureau clearly tells us what it's intent is with that part....

The Bureau also stated in the proposal that it recognized there were cases in which a consumer might not have been confused by receiving good faith estimates on the same day, or even at the same time, as the consumer receives the actual settlement costs. However, because the estimated costs would match the actual costs, the Bureau expressed concern that consumers could be confused by seemingly duplicative disclosures. The Bureau was also concerned that this duplication could contribute to information overload stemming from too many disclosures, which could, in turn, inhibit the consumer’s ability to understand the transaction. Accordingly, the Bureau proposed § 1026.19(e)(4)(ii) to prohibit creditors from providing a consumer with disclosures of estimated and actual costs at the same time. To draw a clear line to facilitate compliance, the creditor would not have complied with the requirements of proposed § 1026.19(e) if the consumer received revised versions of the disclosures required under § 1026.19(e)(1)(i) on the same business day as the consumer received the disclosures required by § 1026.19(f)(1)(i).

The Bureau further drives the point home...

The Bureau has considered the comments and believes that § 1026.19(e)(4)(ii), as proposed, would not have delayed closings or limited a creditor’s ability to manage cost increases and disclose them to the consumer, because although it would have prohibited simultaneous delivery of the Loan Estimate and the Closing Disclosure, proposed comment 19(e)(4)-2 would have clarified that under certain circumstances, a creditor could comply with § 1026.19(e)(4) by reflecting revised disclosures on the Closing Disclosure. The Bureau acknowledges that some commenters did not understand proposed § 1026.19(e)(4)(ii).

Nice Good job.

Jen J and Glutes, thanks, those are what I was looking for. I know it doesn't specifically address the initial LE and CD, but through implication I think I can hang my hat on that when discussing with my business groups as the safe route is to send the CD the next day. Appreciate all of the comments.

It's increasingly and frustratingly the case that a full understanding of the complex rules issued by the Bureau -- especially those involving mortgages -- requires reading not only the regulation and the commentary (a standard requirement for many years), but also the Federal Register text that accompanies them to publication, along with interpretations and guidance documents. It sure ain't the compliance world of the 1970s, when I was earning my compliance chops.

That makes these discussion forums all the more valuable for exchanging thoughts and opinions. This discussion is a prime example.

Good post John; you're exactly right. Now, who said that compliance ain't hard?

To take an alternative position on the topic, if we engaged in a similar practice like you MB Guy, as far as sending out an initial LE and CD together, I'm not sure the preamble language that I provided earlier would be enough to make me stop the practice if we had a good business reason to be doing that to begin with and it didn’t adversely affect the borrower. This would be something I wouldn't mind challenging an examiner or the Bureau on if the practice of sending out an initial LE and CD at the same time were questioned or they wanted to cite this as a violation of the TRID rule.

While the preamble provides information to clarify the basis, purpose, intent of the rule, it is not part of the regulatory text nor is it legally enforceable, at least I remember that to be the case. Because of that, I'm reminded of the disclosure that we typically see for any summary or guide to any rule..."This summary or guide is not a substitute for the final rule. Only the final rule and it's Official Interpretations can provide yada yada yada...". If this is truly the case, then you won't find any language in the final rule or Official Interpretation, that expressly prohibits you from providing the initial LE and final CD at the same time. It just isn't there... not even in 1026.19(e)(4)(ii)....which based on the actual language of this part and it's placement in the Reg, is specifically referring to a "revised LE".

Just sayin.

Some other thoughts on the topic.

What if you delivered the initial LE by mail today, you provided the CD in person tomorrow, and the borrower receives the LE 3 days after it was delivered? You didn't "deliver" the disclosures on the same day so you didn't violate a prohibition that isn't even in the final rule, BUT the borrower would have received actual costs info before receiving estimated costs info. What purpose did "delivering" on different days serve in this case?

What if you mailed the LE today and mailed the CD tomorrow, but the borrower receives both disclosures on the same day? What purpose did "delivering" on different days serve in this case?

What if you mailed the LE today and provided the CD in person 3 day later on the same day the borrower receives the LE by mail? What purpose did "delivering" on different days serve in this case?

Where is the benefit to the borrower with the Bank "delivering" on separate days yet the borrower "receives" the disclosures on the same day?

If the Bureau is concerned about a borrower being provided with estimated costs and actual costs info at the same time because that might confuse the borrower, prohibiting simultaneous "delivery" does not guaranty simultaneous "receipt" will be avoided as the questions above show.

Just some food for thought.

Glutes, are you an attorney? LOL

I get your point, but we're probably going to err on the side of caution and just wait a day between them, just to be safe.

I just completed a hmda scrub and came upon a funded loan where the revised loan estimate and closing disclosure were delivered on the same day (3 days prior to consummation). Change in circumstance was loan amount change with changed settlement fees. We will be documenting the file as self identified issue. My question...do we need to refund any fees?