The American Land Title Association (ALTA) has announced its support for a bi-partisan bill introduced in the U.S. House of Representatives by U.S. Reps. Melissa Bean (D-IL) and Shelley Moore Capito (R-WV) that would bring greater transparency to the mortgage lending process by allowing borrowers more time to review their closing documents. The Borrowers’ Right to Inspect Closing Documents Act of 2009 would require borrowers receive their closing documents at least three business days before their scheduled closing.
"U.S. Reps. Melissa Bean and Shelley Moore Capito have listened to consumers who want more time to review their closing documents so that circumstances don’t pressure them into agreeing to a bad loan or excessive closing costs," said Kurt Pfotenhauer, ALTA’s chief executive officer. "ALTA strongly supports the representatives’ efforts and the passage of this bill.”
Currently, under the Real Estate Settlement Procedures Act (RESPA), consumers have the right to request and review a draft HUD-1 Settlement Statement 24 hours before closing. Unfortunately, many borrowers are not aware of this option, nor is there a corresponding requirement that this preliminary HUD-1 Settlement Statement be complete.
The proposed bill would require the lender to provide the completed promissory note, deed of trust or other mortgage instrument, all items needed to complete the uniform settlement statement and the final closing instructions at least four business days before the scheduled date of settlement to the settlement agent. This would allow the settlement agent to make the documents available to the borrower three days prior to closing.
“The Borrowers’ Right to Inspect Closing Documents Act will strengthen RESPA by helping consumers help themselves,” Pfotenhauer said. “The proposal amends RESPA to give borrowers the time they need to review their final closing documents before they get to the closing table.”
For more information, visit www.alta.org.
