Under TRID, creditors have the option of allowing consumers to either acknowledge receipt of the CD or to print a specific caption concerning the borrower’s right to not accept the loan (see 12 CFR § 1026.38[s]). However, as a practical matter, two states (Maryland and Tennessee) require the borrower to sign the CD.
Maryland requires the following, in relevant part:
“(1) Unless disclosed in written agreements signed by the borrower, a licensee may not, directly or indirectly, impose any fee or charge payable by or on behalf of the borrower.
(2) In this section ‘written agreements’ includes all closing documents signed by the borrower.
(3) Compliance with the federal Real Estate Settlement Procedures Act (12 U.S.C. §2601 et seq.) shall be deemed compliance [sic] with §C(1) and (2) of this regulation.” (Md. Code Regs. 09.03.06.07[C])
While the CD is technically required under RESPA (see 12 USCA § 2603) and providing it without signatures could be deemed compliant with Maryland’s administrative code, there is still enough leeway under which a consumer or state agency could make a claim that an unsigned CD is not compliant (e.g. the CD can be used, but since it may also be signed, it should be signed).
In order to mitigate such claims, we are mapping “Closing Disclosure Signature Lines Indicator” (Field 95191) to “Yes” when “Property State” (Field 1714) equals “Maryland.”
As for Tennessee, this state requires the following (in relevant part):
“For any written contract, signed by the party to be charged, and not subject to subsection (a) [which applies to loans subject to particular provisions under Tennessee law governing loan charges, commitment fees, or brokerage commissions], the collection of loan charges shall be limited to those charges agreed to in that contract . . .” (Tenn. Code Ann. § 47-14-113[d])
While the CD is not a contract, in prior years we have received feedback from Tennessee authorities indicating that the closing documents normally provided (including the TIL and the HUD-1) are used to meet this requirement. Since the requirement stipulates that the “contract” be signed, it is a “best practice” to require the CD to be signed, to again mitigate any litigation over whether the consumer did “sign a contract.”
Similar to Maryland, Field 95191 will be set to “Yes” when Field 1714 equals “Tennessee.”
The changes necessary to meet these requirements are already in place. If you have any questions about these state requirements, please contact Client Support at 1.800.497.3584.
October 5, 2015