Learn what has and hasn’t changed

One of the most important results of the Know Before You Owe mortgage initiative is the need for closer collaboration between settlement agents and creditors for both to effectively comply with regulatory disclosure requirements.

 Learn what has and has not changed about settlement agent responsibilities, creditor responsibilities, consumer privacy, and electronic delivery.

Providing the Closing Disclosure to the seller

Section 1026.19(f)(4) of the Know Before You Owe mortgage disclosure rule establishes that the settlement agent is responsible for providing a Closing Disclosure to the seller. The creditor continues to be responsible for the accuracy and delivery of the Closing Disclosure to mortgage borrowers. 

  • § 1026.19(f)(4)(i) states that “the settlement agent shall provide the seller with the disclosures in 1026.38 that relate to the seller’s transaction.” 
  • § 1026.19(f)(4)(ii) states that “the settlement agent shall provide [the seller’s Closing Disclosure to the seller] no later than the day of consummation.” 
  • § 1026.19(f)(4)(iv) states that “when the consumer’s and seller’s disclosures . . . are provided on separate documents, . . . the settlement agent shall provide to the creditor . . . a copy of the [seller’s Closing Disclosure].”   
  • § 1026.19(f)(4)(ii) states that if “during the 30-day period following consummation, an event in connection with the settlement of the transaction occurs that causes [the seller’s Closing Disclosure] to become inaccurate, and such inaccuracy results in a change to the amount actually paid by the seller . . . the settlement agent shall deliver or place in the mail corrected disclosures [to the seller] not later than 30 days after receiving information sufficient to establish that such event has occurred.” 

Providing the Closing Disclosure to the borrower

§ 1026.19(f)(1) of the Know Before You Owe mortgage disclosure rule requires that the Closing Disclosure be provided to the borrower. It assigns responsibility for complying with all of the relevant requirements of this section to the creditor, but states that the creditor may arrange for the settlement agent to do so on its behalf. If the settlement agent agrees to provide the Closing Disclosure to the borrower, the settlement agent must do so in accordance with the requirements of the rule.

  • § 1026.19(f)(1)(v) states that “[a] settlement agent may provide a consumer with the [Closing Disclosure] provided the settlement agent complies with all relevant requirements of this paragraph (f).”
  • § 1026.19(f)(1)(v) states that “[t]he creditor shall ensure that such disclosures are provided in accordance with all requirements of this paragraph (f).” 
  • Comment 1026.19(f)(1)(v)-1 adds that “[b]y assuming this responsibility [of providing the Closing Disclosure], the settlement agent becomes responsible for complying with all of the relevant requirements of § 1026.19(f)” while observing that “[t]o ensure timely and accurate compliance with the requirements of § 1026.19(f)(1)(v), the creditor and settlement agent need to communicate effectively.”
  • Comment 1026.19(f)(1)(v)-2 provides an example where the creditor and settlement agent agree upon who will provide the initial and any corrected Closing Disclosures.  
  • Comment 1026.19(f)(1)(v)-3 provides additional guidance regarding the creditor’s responsibilities when the settlement agent provides the Closing Disclosure for the creditor.
  • Comment 1026.19(f)(1)(v)-4 provides guidance on how creditors and settlement agents may divide responsibilities for complying with the Closing Disclosure.

The creditor is responsible for the accuracy as well as the delivery of the Loan Estimate (the initial as well as any revised Loan Estimates) and the Closing Disclosure (the initial as well as any corrected Closing Disclosures).


  • § 1026.19(e)(1)(i) requires the creditor to provide one or more Loan Estimates reflecting good faith estimates of the terms of the proposed transaction.
  • Comment 1026.19(e)(1)(i)-1 provides that “[i]f any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure based upon the best information reasonably available to the creditor at the time the disclosure is provided to the consumer” and that “[t]he reasonably available standard requires that the creditor, acting in good faith, exercise due diligence in obtaining information.”
  • § 1026.19(e)(3)(i), (ii) and (iii) then provide numerical tolerances to determine whether the good faith standard has been met. These provisions establish fee categories subject to a zero tolerance, a limited tolerance with an aggregate 10% variance permitted, and an unlimited tolerance with any variance permitted so long as the original disclosure was provided in good faith based upon the best information available to the creditor at the time of the disclosure. 
  • Comment 1026(f)(1)(i)-2, provides that the creditor can satisfy its obligation to exercise due diligence to provide the best information reasonably available at the time of a disclosure by looking to relevant authorities, including the “settlement agent for homeowner’s association dues or other information in connection with a real estate settlement.” 
  • § 1026.19(f)(1) requires the creditor to ensure that the borrower receives the Closing Disclosure “no later than three business days before consummation.” 
  • If amounts paid by the borrower exceed the applicable § 1026.19(e)(3) tolerances, § 1026.19(f)(2)(v) allows the creditor to comply with § 1026.19(e)(1) and (f)(1)(i) by providing, no later than 60 calendar days after consummation, a corrected Closing Disclosure and reimbursing the borrower the amount by which any charges exceeded allowable tolerances.  
  • Extra three-day reviews for subsequent corrections made to the Closing Disclosure are unlikely. Many things can change in the days leading up to closing. Most changes will not require the creditor to give three more business days to review the new terms before closing. The new rule allows for ordinary changes that do not alter the basic terms of the deal. Read more about the only three changes that require a new three-day review

The Know Before You Owe rule did not change consumer privacy protections.

  • Congress passed the Gramm-Leach-Bliley Act in 1999. It established consumer privacy protections for financial services customers. These protections are implemented by Regulation P (12 CFR 1016) and analogous regulations. The Know Before You Owe rule did not change these protections.
  • During the process of preparing for the new disclosures, market participants have reviewed their compliance procedures and their approach to consumer privacy.  
  • Because protecting consumer privacy is important, thoughtful consideration of Regulation P’s requirements and exceptions to those requirements is appropriate.

The Know Before You Owe rule did not change the general requirements for establishing when delivery has been made using electronic methods.

  • Congress passed the Electronic Signatures in Global and National Commerce Act (E-Sign Act) on June 30, 2000. The E-Sign Act allows the use of electronic records to satisfy any statute, regulation, or rule of law requiring that information be provided in writing, if the consumer has affirmatively consented to the use of electronic delivery methods and has not withdrawn such consent.
  • The Know Before You Owe mortgage disclosure rule allows in-person delivery and also establishes a presumption that a consumer has received a disclosure three business days after that disclosure was delivered or placed in the mail. This is a longstanding rule often referred to as the “mailbox rule.”
  • Regardless of how the delivery is made, whether in-person, regular mail, overnight mail, electronic delivery, or otherwise, as long as there is sufficient evidence that the consumer received the document, actual receipt has been established and the utilization of presumed receipt is unnecessary.
  • Assuming compliance with E-Sign, the “mailbox rule” and its three business day presumption of delivery applies to email delivery.

Regulation text 

19(e)(1)(iv) Receipt of early disclosures.

iv. Receipt of early disclosures.

If any disclosures required under paragraph (e)(1)(i) of this section are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail.

Official interpretation to 19(e)(1)(iv)

1. MAIL DELIVERY.

Section 1026.19(e)(1)(iv) provides that, if any disclosures required under § 1026.19(e)(1)(i) are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail. The creditor may, alternatively, rely on evidence that the consumer received the disclosures earlier than three business days. For example, if the creditor sends the disclosures via overnight mail on Monday, and the consumer signs for receipt of the overnight delivery on Tuesday, the creditor could demonstrate that the disclosures were received on Tuesday.

2. ELECTRONIC DELIVERY.

The three-business-day period provided in § 1026.19(e)(1)(iv) applies to methods of electronic delivery, such as email. For example, if a creditor sends the disclosures required under § 1026.19(e) via email on Monday, pursuant to § 1026.19(e)(1)(iv) the consumer is considered to have received the disclosures on Thursday, three business days later. The creditor may, alternatively, rely on evidence that the consumer received the emailed disclosures earlier. For example, if the creditor emails the disclosures at 1 p.m. on Tuesday, the consumer emails the creditor with an acknowledgement of receipt of the disclosures at 5 p.m. on the same day, the creditor could demonstrate that the disclosures were received on the same day. Creditors using electronic delivery methods, such as email, must also comply with § 1026.37(o)(3)(iii), which provides that the disclosures in § 1026.37 may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. For example, if a creditor delivers the disclosures required under § 1026.19(e)(1)(i) to a consumer via email, but the creditor did not obtain the consumer’s consent to receive disclosures via email prior to delivering the disclosures, then the creditor does not comply with § 1026.37(o)(3)(iii), and the creditor does not comply with § 1026.19(e)(1)(i), assuming the disclosures were not provided in a different manner in accordance with the timing requirements of § 1026.19(e)(1)(iii).

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