I know this bill has been floating along for a while now and I have meant to comment on it.  I generally agree with this proposal and hope that it sees passage

H.R. 4229-Borrowers' Right to Inspect Closing Documents Act of 2009.  

This bill was introduced in the house in December 2009 and has been assigned to the Committee on Financial Services.   The focus of this bill is to enable the borrowers to review their entire closing package three days prior to closing.  The bill would make it the responsibility of the lender to provide the closing package to the title agent no less than 4 days prior to closing and then would require the title agent to deliver the package to the borrower 3 days prior to closing. The bill would allow for delivery via electronic communication or by any other method chosen by the borrower, including coming to the title agent's office to review the documents.

I actually agree conceptually with this bill, but I am concerned about the exemptions named in the proposed bill, particularly that provision that allows for exemption for settlements under which the requirements of this [subsection] is impractical.  Well, that is just so very broad that every single transaction could qualify under the exemption.  I can think of any number of ways in which the lender could come with a scenerio in which they could claim the "impractical" exemption.

I took some time last night to read a few blogs on this subject and some of the responses to the bill.  In most cases, lenders were crying foul and Realtors were applauding the attempt of congress to at least TRY to give the consumer an opportunity to see documents in a timely enough fashion to enable them to ask questions, get clarification, etc. 

We all know that current RESPA rules REQUIRE that the borrower be provided an opportunity to review the HUD-1 24 hours prior to closing.  Now seriously, how often does that happen in an ordinary closing transaction?

As an REO specialist I will tell you that we always have the final HUD-1 no less than 3 days prior to closing because our sellers require that much time to get the HUD-1 approved and signed off.  I have rarely had a lender tell me they absolutely cannot accomodate that because we tell them from day one if they miss the deadline the closing will be delayed and they, the lender, will pay any penalty that may be assessed by the seller. I have in fact had instances where the lenders have paid a per diem penalty on behalf of a buyer. You can be sure that those lenders will not likely miss a deadline again. I would suggest that if the lender can produce final closing intstructions and a final HUD to me 3 days prior to closing, they can certainly present the entire closing package, and I have in fact had lenders do just that.

I received just last month a letter from a lender advising me that they are going ahead with their commitment to deliver the final closing package 3 days prior to closing.  They are being proactive and acting in the best interest of the consumer. They made it clear that title agents doing business with them would have to adhere to their new guidelines as far as delivery of our preliminary HUD, title binder, etc. so that they in turn can get us the closing package early.  Now, what lender do you think I recommend? 

I just don't buy into the notion that the lenders are overwhelmed and that this would cause any hardship to them as was stated in many of the responses I read last night. Nor can it be said with any truth that this law would cause any closing delays. If we all know from the beginning what the requirements are we can all work together to make it happen.  I hope that we all follow this bill and, if you support the bill, make your support known to the sponsers or your local representatives.