Mortgage Loan Originator (MLO) Licensing Practice Test

Who is ultimately responsible for ensuring that the borrower receives a Closing Disclosure (CD)?

1. The Borrower

2. The Loan Originator

3. The Creditor

4. The Underwriter

The correct answer is: The Creditor

The Closing Disclosure (CD) is a critical document in the mortgage loan process that outlines the final terms and costs of a mortgage. The creditor, which typically refers to the lender or financial institution providing the loan, holds the ultimate responsibility for ensuring that the borrower receives the CD in a timely manner. This is mandated by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), which require that the CD be provided to the borrower at least three business days before the closing of the loan. While the loan originator plays a key role in preparing the loan documents and may assist in delivering the CD to the borrower, the ultimate liability for ensuring that the document is correctly completed and delivered lies with the creditor. The creditor must ensure compliance with regulatory requirements and confirm that the borrower has reviewed and acknowledged the terms of the closing disclosure. The borrower, while needing to receive and review the CD, is not responsible for its delivery. Meanwhile, the underwriter’s role focuses on evaluating the loan application and assessing risk rather than managing the documentation process at the closing stage. Thus, the creditor’s responsibility in this process is crucial and foundational to protecting the borrower’s interests and ensuring transparency in the lending process.