How to comply with the 3 day rule for closing disclosures
Pursuant to 12 C.F.R §1026.19(f)(2) of Regulation Z, the creditor must deliver the closing disclosure to the consumer at least three business days prior to the date of consummation of the transaction. This enables the consumer to compare the closing disclosure to the loan estimate to ensure that all the charges meet expectations. This rule raises a couple of questions.
First, what is considered “consummation of the transaction”? Second, how are the three business days calculated?
Consummation of the transaction
According to 12 C.F.R. § 1026.2(a)(13) of Regulation Z, consummation is the day the consumer becomes contractually obligated on the loan (i.e., the day he/she signs the note). This is typically the same day as closing according to 1026.38(a)(3)(ii)) of Regulation Z.
Delivery of the closing disclosure by mail
§1026.19(f)(1)(iii) provides that, if the closing disclosure is not provided to the consumer in person, delivery is presumed to occur three business days after it is placed in the mail.
Once delivery has occurred(three business days after placed in the mail), the creditor must wait three business days before the closing/consummation of the transaction.
Delivery of the closing disclosure in person
If the creditor delivers the closing disclosure in person, closing/consummation may occur any time on the third business day after the in person delivery.
How business days are calculated
Pursuant to §1026.2(a)(6), business days are calculated from Monday through Saturday. Sundays and the legal public holidays are excluded from the calculation. Public holidays are New Year's Day, the Birthday of Martin Luther King, Jr., Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
Exceptions to the 3 day rule
The only exception to the 3 day rules is if closing within the waiting period is necessary to meet a bona fide personal emergency. Such instances are extremely rare and making such a determination depends on the facts that surround scenario.