What does the "20/20 rule" in mortgage compliance mandate?

The "20/20 rule" in mortgage compliance primarily focuses on the timing of the Loan Estimate and Closing Disclosure documents that lenders are required to provide to borrowers. The rule specifies that if lenders do not issue these critical documents in a timely manner, they are prohibited from collecting any fees related to the transaction until all required disclosures have been properly delivered.

This rule is designed to protect consumers by ensuring they receive essential information about the terms and costs of their loan in a timely fashion. It emphasizes the importance of transparency and informed decision-making in the home buying process. The idea is to give borrowers adequate time to review the loan terms and disclosures without feeling rushed into committing financially. Consequently, until the lender has fulfilled their obligation to provide all necessary documentation, they cannot proceed to collect any fees, which adds a layer of consumer protection in the mortgage lending process.