When an eligible mortgage proceeds to close, lenders are required to deliver a Closing Disclosure form, at least 3 business days before loan consummation. This form details the actual transaction terms and costs to be committed at closing and consummation.
The Closing Disclosure must be delivered in writing (digital or paper). The details of the disclosure are specified by Federal guidelines; only the details specified by the CFPB should be included.
Should transaction terms or transaction costs change prior to loan consummation, an updated Closing Disclosure should be provided by the lender. This may change the loan consummation deadline in turn, requiring an additional 3-day waiting period, in some cases.
Loan closing and loan consummation are not exactly the same thing; although they may occur at the same time in some US States, they are legally distinct.
- Loan Consummation: borrower becomes contractually obligated to the lender (but not necessarily the seller.)
- Closing: all parties have committed and signed the necessary documents.
The 3-business-day period applies to the gap between delivery of the Closing Disclosure, and legal loan consummation.
Lenders will have more information on the specific circumstances that apply to a given transaction in a given US State.