Timing on HOEPA Disclosures

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Question:

When disclosing a HOEPA loan we are required to provide borrower with HOEPA disclosures 3 days prior to closing the loan. If the loan has a 3 day right of recission, are we in compliance by disclosing at the time the loan is closed if funding of loan is not until 3 days?

Answer:

Answer by David Dickinson:
No. You must provided HOEPA disclosures 3 days PRIOR to consummation (closing) of the loan [refer to Section 226.31(c)]. Then, after closing, you must wait 3 more days for the rescission period to expire before advancing funds.

Answer:

Answer by Andy Zavoina:
When it comes to HOEPA, many bankers cite only 226.32. But .31 has some provisions too, such as this one, being David's source:Section 226.31 General rules.

(c) Timing of disclosure--(1) Disclosures for certain closed-end home mortgages. The creditor shall furnish the disclosures required by Section 226.32 at least three business days prior to consummation of a mortgage transaction covered by Section 226.32.

First published on BankersOnline.com 2/2/04