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Negative Information Disclosure Language

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Question: 
Are we allowed to include the Negative Information Disclosure language in the promissory Note form for all applicable loans? We currently provide a separate one page document with just the Negative Information Disclosure language on it for the customers to sign. I was hoping to eliminate one document by including this in the Note.
Answer: 

There are timing requirements in the FCRA as to which disclosure is provided based on when you make the disclosure and report the information.

https://www.bankersonline.com/regulations/12-1022-appb

Appendix B has the details.

Loan closing is an opportune time to make this disclosure. A safe harbor is provided when the model forms are used and there is some opportunity for modifying these. Your examiners are most interested in your policy and procedures to make the disclosures but a mortgage loan investor may be looking for a borrower signed form which is retained with the loan file. My point is, you likely could make it a part of the note, with counsel's approval and/or that of a forms vendor, but ensure what you do doesn't negatively impact non-agency requirements on this.

First published on 04/07/2019

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