When must an MLO provide the Closing Disclosure to borrowers?

The Closing Disclosure must be provided to borrowers at least three business days before the consummation of the loan. This requirement is outlined in the Truth in Lending Act and the Real Estate Settlement Procedures Act, which aim to ensure that borrowers receive all necessary information regarding the terms of their loan and closing costs well in advance of finalizing the transaction.

Providing this disclosure three days beforehand allows borrowers adequate time to review the terms and ask questions or negotiate if needed, fostering transparency and reducing last-minute surprises. This timeframe aids in the smooth completion of the home buying process by promoting informed decision-making.

The other options suggest shorter timeframes than what the law mandates, which could do a disservice to borrowers by not giving them sufficient time to understand the details of their loan agreement prior to closing. For example, providing the disclosure just one business day before closing would not comply with the regulatory requirement, possibly leading to issues at closing or causing delays.