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Verbal Telephone Confirmation: 3 Day Closing

Question: 
Can a lender accept verbal telephone confirmation from an applicant of receipt of the 3-day closing disclosure?
Answer: 

by Jim Bedsole:

There is no regulatory requirement that the receipt of the closing disclosure at least 3 business days prior to closing be documented in writing. Some secondary market investors may require written confirmation if purchasing the loan, but otherwise you are free to establish your own procedures on how you confirm. You'll want to be consistent so you don't wind up with any fair lending issues.

Answer: 

by Randy Carey:

1026.19(f)(1)(iii) Receipt of disclosures. If any disclosures required under paragraph (f)(1)(i) of this section are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail.

Verbal is not going to cut it unless they are delivered under E-Sign and you maintain documentation as to time of receipt or you follow the process outlined for mail delivery in 1026.19(e) for the LE and have some other proof.

19(e)(1)(iv) Receipt of early disclosures.

1. Mail delivery. Section 1026.19(e)(1)(iv) provides that, if any disclosures required under § 1026.19(e)(1)(i) are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail. The creditor may, alternatively, rely on evidence that the consumer received the disclosures earlier than three business days. For example, if the creditor sends the disclosures via overnight mail on Monday, and the consumer signs for receipt of the overnight delivery on Tuesday, the creditor could demonstrate that the disclosures were received on Tuesday.

Answer: 

by Jim Bedsole:

The creditor may, alternatively, rely on evidence that the consumer received the disclosures earlier than three business days.

The above phrase, in my opinion, gives you the latitude to rely on verbal confirmation from the borrower that they received the disclosure as evidence that the consumer received the disclosures earlier than 3 business days after mailing. You will certainly need to make sure your procedures for that are well-documented and applied consistently, but I don't see that as prohibiting verbal confirmation.

Answer: 

by Randy Carey:

I thought verbal evidence was considered hearsay. smile

I would not suggest that - but everyone needs to come to their own conclusion. The example given is a signed receipt.

Answer: 

by John Burnett:

I'd want evidence of the borrower's receipt. If you routinely record such telephone calls and can play them back as evidence, maybe I would accept it. I would accept a borrower-initiated email that confirms receipt, or a receipt signed by the borrower provided by an overnight delivery service.

I would not want to rely on a loan officer's scribbled note in the loan file that "Jim called 7/31. Got the CD."

Answer: 

by Jim Bedsole:

That's why I referenced "well-documented". The burden will be on the bank to prove to the regulators that the evidence is sufficient.

First published on 02/09/2020

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