CFPB issues clarification on “third parties”

One of the chief complaints we hear from Realtors® when it comes to the TILA-RESPA Integrated Disclosure Rule is that Realtors® feel excluded from the transaction when financing is involved, because the rules generally prohibit lenders from providing copies of the Closing Disclosure to the licensee.

Some lenders provide a copy of the Closing Disclosure to the agent with written permission from the consumer. Others may provide a different form with similar information, but not all. Many agents end up relying on their clients to promptly supply them with a copy of the relevant documents, so the agent can review the documents before closing.

But exceptions to that non-disclosure rule already exist, and a recent interpretation by the Consumer Financial Protection Bureau has added another one. Specifically, the rules state that it’s permissible to share a consumer’s non-public personal information, if it is a “usual, appropriate or acceptable method to provide the customer or customer’s agent or broker with a confirmation, statement or other record of the transaction, or information on the status or value of the financial service or financial product.”

After examining the common practice of lenders providing copies of closing information to brokers and agents, the CFPB official comments now expressly recognize brokers and agents as “third parties,” who may receive the Closing Disclosure directly, so long as lenders modify the Closing Disclosure in one of three ways.  These modifications are basically an omission of the private information for the other party. This means that you will not be getting a full disclosure showing all the figures for both sides of the transaction.

Remember that this is not a requirement; it merely gives the lenders permission to provide a copy directly. There may be financial institutions that will not provide you with a copy of the Closing Disclosure directly.

The final rule will not go into effect for at least 60 days, which gives you an opportunity to communicate with lenders about how they intend to proceed under the new rules. The decision to provide agents with a copy of the Closing Disclosure may very well depend on whether the lender understands that your request to obtain a copy comes from an intent to provide excellent service to your clients.