What is the requirement for lenders regarding Loan Estimates under TILA for closed-end mortgages?

The requirement for lenders regarding Loan Estimates under the Truth in Lending Act (TILA) for closed-end mortgages mandates that lenders must provide a Loan Estimate within three business days after a borrower submits a loan application. This regulation is designed to ensure that borrowers receive timely and clear information about the costs and terms of the loan, allowing them to make informed decisions.

The three-day window is crucial as it provides borrowers with adequate time to review the estimate, compare it with other offers, and engage in their decision-making process without feeling rushed. Additionally, the Loan Estimate must be delivered in the form prescribed by the Consumer Financial Protection Bureau (CFPB) and includes essential details such as the loan's interest rate, monthly payment, and various closing costs.

This three-day rule helps to create transparency in the mortgage process and protects borrowers from any last-minute changes in terms or unexpected costs just before closing. It also aligns with the broader intent of TILA to promote fair lending practices and ensure that consumers are fully informed about their financial commitments.