In addition to the GFE changes, the RESPA proposal requires that the borrower receive the settlement statement three days before closing. This statement includes a long closing script that must be read to borrowers at the closing table.

Compliance tactics

The best way to comply with the new disclosure rules is to know and understand their details and implement an electronic-disclosure system.

The most challenging feature in these new regulations and proposals is the complex timing regarding disclosures. For example, the RESPA changes propose delivering a new GFE upon receiving a "GFE application," while the initial TILA disclosures must come within three days of "application." But a GFE application is not necessarily a loan application.

As closing approaches, disclosures do not end. Seven days before closing, the final TILA disclosures must be delivered. They must be redisclosed at least three days before closing if there are term-related rate changes. The settlement statement also must be delivered to the borrower, who also must receive the closing documents and disclosures.

To keep track of moving parts and important deadlines, "instant replay" technologies are available that can ease the disclosure process for brokers and lenders.

These systems ensure that you have issued the proper disclosures to the right people at the right time. They can help deliver all necessary disclosures to borrowers by e-mail, often with an audit trail to track accuracy and timeliness. Some systems also can help send the disclosures via postal mail if borrowers do not access the disclosures or acknowledge receipt in a specified time.

Any system for electronic disclosures must meet the legal requirements set forth by the Uniform Electronic Transaction Act (UETA) and state laws, most of which are patterned after UETA.

Ultimately, a good electronic-disclosure and -delivery system will help brokers ensure compliance with guidelines that grow more complex by the day. Brokers should learn the basics of the new disclosure rules and make wise decisions when selecting vendor.

Fredric J. Gooch is general counsel for Idaho Falls, Idaho-based DocuTech Corp. Since 1991, DocuTech has provided outstanding compliance services and documentation technology for the mortgage industry. DocuTech's software interfaces with leading loan-origination systems and enables mortgage professionals to generate documents locally. DocuTech manages and secures all information needed for a loan, guaranteeing accuracy, security and compliance. Reach Gooch at fredg@docutechcorp.com.

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