Q: Is the creditor able to share the Loan Estimate or Closing Disclosure with third parties under federal law?
A: Yes, if the method of sharing the Loan Estimate or Closing Disclosure complies with the requirements under the Gramm Leach Bliley Act (GLBA) and Regulation P, as well as other state and federal laws. GLBA and Regulation P generally provide that a financial institution (i.e., creditor or settlement agent) may not share its customer’s (i.e., consumer or seller) nonpublic personal information with a nonaffiliated third party without providing notice to the customer of such information sharing and an opportunity to opt-out of such sharing. However, there are several exceptions to these notice and opt-out requirements.
For example, a customer (i.e., the consumer and seller) may consent to the sharing. Creditors and settlement agents may disclose customer information with the consent or at the direction of the customer provided that the customer has not revoked the consent or direction. (12 CFR § 1016.15(a)(1))
As another example, GLBA section 502(e)(8) provides an exception that applies if a creditor or settlement agent shares its customer’s nonpublic personal information to comply with federal, state, or local laws, rules and other applicable legal requirements. Regulation Z requires the use of the Closing Disclosure by the creditor to provide the required disclosures under § 1026.38 concerning the transaction to the consumer under § 1026.19(f)(1)(i), requires the settlement agent to provide to the creditor a copy of the disclosures provided to the seller under § 1026.19(f)(4)(iv) when the consumer’s and seller’s disclosures are provided in separate documents, and requires the settlement agent to provide the seller with the disclosures in § 1026.38 that relate to the seller’s transaction reflecting the actual terms of the seller’s transaction under § 1026.19(f)(4)(i). GLBA section 502(e)(8) and Regulation P § 1016.15(a)(7)(i) permit this required sharing of information without providing notice of such information sharing and an opportunity to opt-out of such sharing.
Other state or federal laws may also apply. Creditors, mortgage brokers, settlement agents, and others are encouraged to complete an analysis under the GLBA and Regulation P, as well as other applicable state and federal laws, if they are sharing a consumer or seller’s personal information on the Loan Estimate or Closing Disclosure.
See section 11.7 above for the optionality allowed if separate Closing Disclosures need to be provided to the consumer and seller.
Note: The section-by-section analysis for § 1026.38(t)(5)(v) in the Bureau’s 2017 amendments to the TILA-RESPA Rule provides more examples of how GLBA and Regulation P exceptions might apply.