Closing Disclosures (CDs) & “3 Day Review” Period Explained

This topic is the most viewed page on our entire website, so I thought I’d update it and send it out again b/c there is clearly a lot of interest.

People always want to know the exact day we can close when we prepare a Closing Disclosure (CD) and send loan documents to title.

As a reminder, a CD is a form that sets out all of the updated fees and terms associated with a borrower’s loan.

Lenders can prepare CDs at any time during the financing process, but because the fees they disclose are so heavily regulated, most lenders have a few checks in place before a CD can be sent, including:

  • Loan is at least conditionally approved
  • Appraisal is in and any value issues are addressed
  • Insurance is in, or home is confirmed to be insurable
  • Lender has collected invoices for any loan-related third party fees, such as credit report or HOA fees

A CD is typically sent electronically for the borrower’s e-signature.

Borrowers cannot sign loan documents until three business days have passed from the date of the CD acknowledgment (or e-signing).

If any additional loan-related fees are added after the initial CD is signed, a new CD may need to be issued, potentially starting a new waiting period.

This is why most lenders do not issue CDs until they know what all of the fees or closing costs will be with relative certainty.

Some lenders issue CDs early in the process and they protect themselves (or the need to re-disclose) by simply overstating some fees.

We avoid this practice b/c it fosters confusion and it can be misleading.

WAITING PERIODS

If the CD is acknowledged on a Thursday, for example, the borrower can sign loan docs on the following Monday; Friday would be Day #1; Saturday would be Day #2; and Monday would be Day #3 (borrower can sign on Day #3).

The table below sets out the acknowledgment and earliest possible signing days.

ACKNOWLEDGED CAN SIGN
Monday Thursday
Tuesday Friday
Wednesday Saturday
Thursday Monday
Friday Tuesday

Lastly, federal holidays and Sundays do not count as business days.