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For a home purchase loan, are we required to provide separate closing disclosures to the buyer and the seller? In the past, we provided both parties with the same HUD. Is that a best practice? Are there any privacy concerns? Can we also provide the Closing Disclosure to the realtor? – IBA Compliance Connection

IBA Compliance Connection

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For a home purchase loan, are we required to provide separate closing disclosures to the buyer and the seller? In the past, we provided both parties with the same HUD. Is that a best practice? Are there any privacy concerns? Can we also provide the Closing Disclosure to the realtor?

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No, we believe it would violate your customer’s privacy rights if your bank were to provide a full Closing Disclosure to the seller, unless your customer has consented to the disclosure. Alternatively, the TRID rules provide a modified Closing Disclosure form that redacts certain personal financial information of the buyer for purposes of providing to the seller, which also would resolve any privacy issues.

Similarly, we would recommend obtaining your customer’s consent before sharing the Closing Disclosure with the customer’s realtor or opt to provide a modified Closing Disclosure form that redacts your customer’s personal financial information.

For resources related to our guidance, please see:

  • Regulation P, 12 CFR 1016.10(a)(1) (“Except as otherwise authorized in this part, you may not, directly or through any affiliate, disclose any nonpublic personal information about a consumer to a nonaffiliated third party . . . .”)
  • Regulation P, 12 CFR 1016.15(a)(1) (“Exceptions to opt out requirements . . . . (1) With the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction.”)
  • Illinois Banking Act, 215 ILCS 5/48.1(c) (“Except as otherwise provided by this Act, a bank may not disclose to any person, except to the customer or his duly authorized agent, any financial records or financial information obtained from financial records relating to that customer of that bank unless . . . .”)
  • Regulation P, 12 CFR 1016.15(a)(1) (“Exceptions to opt out requirements . . . . (1) With the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction.”)
  • Regulation Z, 12 CFR 1026.38(t)(5)(vi) (Certain information related to the borrower “may be deleted from the form provided to the seller or a third-party, as illustrated by form H-25(I).”)
  • Regulation Z, Form H-25(I) (Model Form Closing Disclosure for Disclosure Provided to Seller)