Comment from A Bigger Better Mortgage
A Bigger Better MortgageSupportBusiness
Summary: The commenter, a mortgage broker, supports the proposed three-day "cooling off" period after closing to allow borrowers to review the full closing package. They argue that brokers currently lack visibility into the final documents and that the cooling-off period provides necessary protection for borrowers against errors or undisclosed terms.
The three day 'cooling off' period after closing (signing) makes since so the borrower can receive the FULL CLOSING PACKAGE, i.e., the mortgage (or note), any loan agreement, if any. As it is now, they only get to review the CD (the money they are spending) prior to signing. They should have the opportunity to take the docs to their attorney. Brokers don't usually get to see the docs their borrower is signing, lenders don't send them to us. The only way we see them is by request to title AFTER signing. We can't explain them to our borrower because we don't have them and we don't know what's in there either unless we are at the closing. The rate may not be the same, the lender may have changed it. The doc department may have a pre payment penalty where there shouldn't be one, or they may have an ARM instead of a fixed rate. I've had lenders slip things in like a 4506T, now 4506C in a loan package that shouldn't have it because it's not full doc. Most doc/funding depts use third party software and doc depts don't know what boxes to check, so they check 'all'. Everything gets sent in the packet even if it shouldn't be in the package. because we can't see what's in the closing docs, we can't say, 'hey, that's incorrect'. The settlement statement doesn't show the rate and terms, the note or mortgage does and they don't see that until the day of signing, yes I think the colling off period is a good thing but as a broker I would like to review it before they sign. The LE is sent out way too many times and the timelines on those confuse most LOs. All disclosures can be sent out the same day the 1003 is sent out to sign, they are all on the same software we use, why wait three days? Lenders have found a way around Tolerance Laws so they don't have to redisclose.
Some people who work in the docs\funding lack training. They should know what the loan type is and what docs to send out, that includes disclosures. It's a mess, so they also need software training, but most don't know what to send out for each loan type either.