102. Federal rules require a Closing Disclosure document provided by the lender. The broker should counsel the borrower to review this document and compare it with the Loan Estimate document. The Closing Disclosure should be received by the borrower
Answer: B
The Closing Disclosure should be received by the borrower at least 3 days prior to loan consummation.
The Closing Disclosure must be provided to the borrower a minimum of three business days before the loan consummation to allow adequate time for review and comparison with the Loan Estimate.
A) at the closing of the transaction.
Receiving the Closing Disclosure at the closing of the transaction does not comply with federal regulations. The purpose of the document is to inform the borrower about the final terms and costs, and providing it at closing would not give the borrower sufficient time to review the information.
B) at least 3 days prior to loan consummation.
This option is correct as it aligns with federal rules, which stipulate that the Closing Disclosure must be delivered to the borrower at least three business days before the loan consummation. This timeframe allows borrowers to thoroughly review the details and ask questions regarding their loan terms.
C) not later than 30 days following the loan consummation.
Providing the Closing Disclosure 30 days after loan consummation is not compliant with federal regulations. The purpose of the document is to ensure that borrowers understand their final loan terms before they finalize the loan, which cannot be achieved if it is delivered after the consummation date.
D) not later than 10 business days following loan application.
This option is incorrect as it misstates the timing of the Closing Disclosure requirement. While there are rules regarding the timing of the Loan Estimate, the Closing Disclosure specifically must be provided at least three days prior to consummation, not within ten days after the loan application.
Conclusion
The requirement for the Closing Disclosure to be received at least three days prior to loan consummation is crucial for ensuring borrowers have the opportunity to review their loan terms before finalizing the transaction. Options A, C, and D do not meet this requirement and therefore fail to comply with federal regulations, confirming that option B is the only correct choice.