How should we distribute the CHARM Handbook and the HUD Settlement Cost Booklet to customers who access our loan applications online? Currently, our online system automatically prints the both documents, leading to customer complaints. We don’t accept applications online; customers can submit applications by faxing, mailing, or bringing the application to a branch.

We do not believe that the Consumer Handbook on Adjustable Rate Mortgages (CHARM Handbook) or the Settlement Cost Booklet (referred to in the rules as the “special information booklet”) need to be automatically printed with loan applications that your customers access online. As explained below, the CHARM Handbook can be provided to an online loan applicant through a variety of means (such as on screen or through a hyperlink), and the Settlement Cost Booklet can be delivered electronically after complying with the E-Sign Act requirements.

Electronic versions of both documents are now available from the CFPB, which took over responsibilities for the CHARM Handbook and the Settlement Cost Booklet from HUD and the Federal Reserve, respectively: CHARM Handbook, Settlement Cost Booklet.

Consumer Handbook on Adjustable Rate Mortgages (CHARM Handbook)

For customers that access your online applications, you must provide the CHARM Handbook on or with the blank electronic application — that is, you must provide the CHARM Handbook in electronic form, on your website (unless the customer is physically present at a branch and accesses an application electronically at a kiosk). 12 CFR 1026.19(b)(1)Official Interpretations, 12 CFR 1026, Paragraph 19(c) Comment 1. There is no requirement to automatically print the entire booklet with the loan application, and the staff commentary suggests several ways to satisfy this requirement with a non-exhaustive list of examples:

(A) The disclosures could automatically appear on the screen when the application appears;

(B) The disclosures could be located on the same web page as the application (whether or not they appear on the initial screen), if the application contains a clear and conspicuous reference to the location of the disclosures and indicates that the disclosures contain rate, fee, and other cost information, as applicable;

(C) Creditors could provide a link to the electronic disclosures on or with the application as long as consumers cannot bypass the disclosures before submitting the application. The link would take the consumer to the disclosures, but the consumer need not be required to scroll completely through the disclosures; or

(D) The disclosures could be located on the same web page as the application without necessarily appearing on the initial screen, immediately preceding the button that the consumer will click to submit the application.

Official Interpretations, 12 CFR 1026, Paragraph 19(b) Comment 2(v).

Settlement Cost Booklet

The Settlement Cost Booklet required by Regulation X is subject to different delivery requirements. In general, it must be mailed or delivered to the customer no more than three business day after receiving the loan application. 12 CFR 1024.6(a). So, for example, you could mail or deliver the Settlement Cost Booklet with the customer’s early disclosures.

Regulation X and the Electronic Signatures in Global and National Commerce (E-Sign) Act permit you to provide the Settlement Cost Booklet electronically. Again, there would be no requirement to automatically print the entire booklet. However, before providing the booklet in electronic form, you must obtain the applicant’s consent and comply with the other provisions of the E-Sign Act. 12 CFR 1024.315 USC 7001(c).