How to fix a defective disclosure after closing

Facts: A seller conducts a real estate closing consummated of January 17th, 2019. All the documents are executed and the appropriate sections are signed and notarized. Upon review of the closing disclosure, an employee realizes that the “Estimated Total Monthly Payment” portion of the closing disclosure is blank in violation of CFPB regulation. The employee realizes this mistake on February 20th, 2019, just over a month after consummation.

Issue: A non-numeric error was discovered more than one month after consummation. How does the Seller rectify the issue to properly display the “Estimated Total Monthly Payment” in accordance with the CFPB rules?

Rule: According to §1026.19(f)(2)(iv) of Regulation Z, A creditor does not violate the CFPB rules when disclosures contain non-numeric clerical errors, provided the creditor delivers or places in the mail corrected disclosures no later than 60 days after consummation.

Analysis: In this scenario, the seller was able to find the error within 60 calendar days after consummation. Therefore the seller would not be in violation of the CFPB rules if the seller acts immediately and places corrected disclosures in the mail within 60 days of the consummation date.

Conclusion: It is imperative that sellers conduct ongoing review of their closing documents to ensure that they comply with all CFPB requirements. As shown above, if errors exist in the closing documents, spotting those errors soon after consummation has a direct impact on the seller’s ability to cure these defects as long as the defects are discovered within the required timeframe.