What is the "three-day rule" in mortgage disclosures?

The "three-day rule" in mortgage disclosures refers to the requirement that borrowers must receive the Loan Estimate and Closing Disclosure at least three business days prior to closing on a mortgage loan. This rule is part of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure Rule, which aim to provide borrowers with the necessary information to make informed decisions about their loans and to ensure they have adequate time to review the terms and costs associated with their mortgage.

Receiving these disclosures three days in advance allows borrowers to carefully consider the loan terms, understand their financial obligations, and address any questions or concerns they may have before finalizing the transaction. This helps promote transparency and protects consumers from last-minute surprises at closing.

The other options do not accurately capture the intent of the "three-day rule." For instance, disclosures being required three weeks before closing is impractical and would not allow for a timely review. Disclosures presented at closing would deny borrowers the opportunity to review the information beforehand, undermining the protections this rule is designed to offer. While borrowers may have the ability to waive certain requirements in specific situations, the three-day rule itself cannot be waived when it comes to the essential disclosures that ensure borrowers are fully informed before