Revised closing disclosure vs. Corrected closing disclosure

Revised closing disclosure

From time to time, changes to the terms of a loan may occur after a closing disclosure is sent to the consumer but before the consummation occurs. Regulation Z §1026.19 authorizes a revised closing disclosure to be sent in only three instances:

·         changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods)

·         changes the loan product

·         addition of a prepayment penalty to the loan

If any of the three changes above occur between the time the closing disclosure is sent and the closing/consummation, the consumer must be provided a revised closing disclosure that includes the updated changes.

If a revised closing disclosure is issued due to any of the above three reasons, the creditor must deliver the revised closing disclosure to the consumer at least three business days prior to the date of consummation of the transaction.

If the revised 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. If the creditor delivers the revised closing disclosure in person, closing/consummation may occur any time on the third business day after the in person delivery.

Corrected closing disclosure

According to Regulation Z §1026.19(f)(2)(i), for any other changes to the loan terms that occur after the closing disclosure is sent but before consummation, the lender must issue a corrected disclosure that includes the updated loan terms. The creditor must simply ensure that the borrower receives the corrected closing disclosure before or at consummation. The three day delivery and waiting period do not apply to corrected closing disclosures.

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.