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Borrower Disclosure Agreement

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BORROWER DISCLOSURE AGREEMENT

This Borrower Disclosure Agreement (the "Agreement") is made effective as of by and between Lender Name: with Address: and Borrower Name: with Address: .

RECITALS

WHEREAS, Lender has agreed to extend credit to Borrower on the terms and conditions set forth in this Agreement and in the related loan documents; and

WHEREAS, Borrower is required by applicable law and prudent lending practices to provide certain disclosures and representations to Lender regarding the Borrower’s identity, use of proceeds, existing obligations, and collateral, and to acknowledge receipt of prescribed disclosures; and

WHEREAS, the parties desire to reduce to writing the specific disclosures, warranties, acknowledgments and consents of Borrower that relate to the loan transaction identified below.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement the following terms have the following meanings: "Loan" means the principal amount, together with interest, fees and other sums payable by Borrower under the loan documents. "Loan Documents" means this Agreement and any promissory note, security agreement, mortgage, guaranty or other agreement evidencing, securing or relating to the Loan. "Maturity Date" means the date the Loan is due in full, if not sooner accelerated.

2. LOAN TERMS AND DISCLOSURES

Maturity Date:    Origination Fee:

3. USE OF PROCEEDS

Borrower represents and warrants that the proceeds of the Loan shall be used only for the purposes described below and not for any unlawful purpose. Borrower shall promptly notify Lender of any material change in the intended use.

4. REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants to Lender that: (a) Borrower is duly organized and validly existing if an entity, or is an individual with capacity to enter into this Agreement; (b) Borrower has full power and authority to execute and perform Borrower's obligations hereunder and under the Loan Documents; (c) the execution, delivery and performance of this Agreement and the Loan Documents by Borrower will not violate any law, agreement or other instrument binding on Borrower; and (d) all information provided to Lender in connection with the Loan is true, complete and correct in all material respects as of the date hereof.

Borrower Tax or Identification Number:

Borrower Entity Type:

5. DISCLOSURE OF RELATED PARTIES AND CONFLICTS

Borrower shall disclose to Lender in writing any relationship between Borrower and any officer, director, employee, agent or affiliate of Lender or any other party that may give rise to an actual or potential conflict of interest affecting the Loan. Failure to disclose such relationships shall constitute a breach of this Agreement.

6. SECURITY AND COLLATERAL

Borrower hereby discloses whether the Loan will be secured and acknowledges that, if security is provided, Lender will have the rights in the collateral set forth in the Loan Documents. Borrower authorizes Lender to take any actions reasonably necessary to perfect its security interest, including filing financing statements.

Loan Secured:

7. DEFAULT AND REMEDIES

Events of default shall include, without limitation: failure to make any payment when due; breach of any representation, warranty or covenant in this Agreement or any Loan Document; insolvency or bankruptcy of Borrower; or material adverse change in Borrower's financial condition. Upon an event of default, Lender may, at its option and to the maximum extent permitted by law, declare all amounts immediately due and payable, exercise rights against collateral, and pursue any other remedies available at law or in equity.

Late Charge (if any):    Collection Costs and Attorney Fees: Borrower agrees to pay reasonable costs of collection, including attorneys' fees, if Lender enforces its rights under this Agreement.

8. PREPAYMENT

Borrower may make prepayments in whole or in part subject to the terms below. Any prepayment may be applied first to outstanding fees and charges, then to accrued interest, and then to principal, unless otherwise agreed in writing.

Prepayment Permitted:

Prepayment Penalty (if any):

9. NOTICES

All notices, requests, consents and other communications contemplated by this Agreement shall be in writing and shall be delivered to the parties at their respective addresses set forth below (or at such other address as a party may designate by notice to the other party in accordance with this Section). Notice is effective upon receipt.

10. AMENDMENTS; WAIVER

No amendment, modification or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party against whom enforcement is sought. No failure or delay by either party in exercising any right shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude further exercise of such right.

11. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to its choice-of-law principles.

12. ENTIRE AGREEMENT

This Agreement, together with the Loan Documents, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings and negotiations, whether written or oral.

13. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired thereby, and the parties shall substitute for such invalid, illegal or unenforceable provision a valid provision that most nearly effects the parties' intent.

14. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures delivered by electronic means shall be effective to bind the signing party.

15. ACKNOWLEDGMENTS

By signing below, Borrower acknowledges receipt of the disclosures contained in this Agreement, certifies that Borrower has read and understands the terms and conditions set forth herein, and confirms that all information provided to Lender is true and complete as of the date of signature.

Borrower Acknowledgement:

LENDER

Printed Name:

By:

Date:

BORROWER

Printed Name:

By:

Date:

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What the Borrower Disclosure Agreement Is and Why It Matters

The Borrower Disclosure Agreement is a written contract that records the terms, borrower representations, and disclosures required when a lender extends credit or a financing arrangement. It typically outlines loan amount, interest rate, fees, collateral description, repayment schedule, borrower covenants, and required statutory notices. The form helps parties acknowledge material facts and regulatory disclosures, creates an auditable record, and reduces downstream disputes. This document is commonly used in consumer and commercial lending, mortgage closings, and private financing to document risk allocation and legal obligations between borrower and lender.

Why a Clear Borrower Disclosure Agreement Protects Both Parties

A clear Borrower Disclosure Agreement protects both parties by documenting material loan terms, required statutory notices, and borrower representations. It supports regulatory compliance under ESIGN/UETA for electronic execution, reduces misunderstanding, and creates an enforceable record that assists in dispute resolution and audit readiness.

Why a Clear Borrower Disclosure Agreement Protects Both Parties

Who Typically Prepares and Signs This Agreement

Lenders, loan officers, attorneys, and borrowers commonly use this agreement to document loan terms and disclosures.

  • Commercial lenders and banks requiring full borrower disclosures for underwriting and loan documentation.
  • Mortgage brokers and title companies using disclosures at or before closing to meet state requirements.
  • Private lenders and investors documenting non-bank loans, collateral, and repayment obligations in writing.

Proper completion ensures enforceability and simplifies underwriting, closing, and regulatory compliance reviews for both parties.

Essential Fields to Include on the Agreement

Borrower Name: Full legal name as on ID
Loan Amount: Principal amount in dollars
Interest Rate: APR expressed as percent
Repayment Schedule: Dates, amounts, and frequency
Collateral Description: Detailed asset description and security
Statutory Notices: Required consumer or commercial disclosures

Common Penalties and Legal Risks from Errors

Incorrect Tax ID: Backup withholding risk (24%)
Missing Disclosures: Agreement may be voidable
Late Filings: IRS penalties per form can apply
Incorrect Signatures: Enforceability challenges in litigation
Notarization Errors: State rejection or invalidation risk
Privacy Violations: HIPAA fines if PHI exposed

Common Preparation Mistakes to Avoid

  • Using informal or incomplete borrower names, nicknames, or initials instead of the legal name causes identity mismatches and tax reporting errors.
  • Failing to include accurate repayment dates or omitting late fee terms leads to disputes and difficulty enforcing collections in court.
  • Providing incorrect taxpayer identification numbers on lender records can trigger backup withholding and IRS penalties under information return rules.
  • Attaching inconsistent collateral descriptions across exhibits or schedules weakens security interest perfection and increases litigation risk.

Core Sections Every Professional Borrower Disclosure Agreement Needs

A professional Borrower Disclosure Agreement balances precise term definitions, required statutory language, and clear signer acknowledgements to reduce ambiguity and support enforceability across jurisdictions.

Loan Terms

Specify principal, APR, amortization method, payment due dates, prepayment penalties, late fee schedule, and any balloon payments. Clarity here determines interest calculation and borrower obligations.

Fees

List origination, processing, underwriting, and third‑party fees, state-specific statutory fees, and any fee caps or fee waivers. Itemize amounts or formulas for transparency.

Collateral

Describe secured assets with VINs, legal descriptions, or account numbers, include perfection steps and cross‑collateralization clauses to protect lender priority.

Representations

Include borrower statements on authority, accuracy of provided information, no prior liens, and consent to credit checks and verification procedures.

Default

Define events of default, cure periods, acceleration rights, remedies, collection costs, and security enforcement procedures including repossession or foreclosure steps.

Notices

Specify notice methods, addresses, effective dates for notice delivery, required federal or state consumer notices, and electronic delivery consents where applicable.

Step-by-Step: Completing the Borrower Disclosure Agreement

Follow these steps to complete and validate a Borrower Disclosure Agreement for paper or electronic execution.

  • 01
    Prepare Document: Assemble terms, exhibits, and required statutory notices.
  • 02
    Verify Parties: Confirm legal names, EINs, and contact details.
  • 03
    Obtain Signatures: Collect borrower and lender signatures with date stamps.
  • 04
    Record & Store: File security instruments and retain executed copies securely.

Where to File, Send, or Submit the Executed Agreement

Typical routing for a completed Borrower Disclosure Agreement depends on loan type and may include lender records, title companies, and county recording offices.

  • Lender Records: Retain original in loan file with audit trail.
  • County Recorder: Record mortgages or deeds where real property secures loan.
  • Title Company: Provide executed copies for closing and title insurance.
  • Tax Authorities: Submit relevant forms for reporting and withholding compliance.

How to Configure an Online Workflow for Borrower Disclosures

Configure an electronic workflow to automate fields, signer order, authentication, and storage when using an eSignature platform.

Field Configuration
Signer Order Set sequential order and optional parallel workflows
Authentication Email, SMS code, or KBA verification
Conditional Fields Show or hide fields based on responses
Storage Save signed PDF and audit trail to cloud

eSignature Pricing and Feature Comparison for Borrower Disclosures

Compare common eSignature plan features and starting prices for processing Borrower Disclosure Agreements online and in-person.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial Yes, 7-day trial No No Yes, limited Yes, limited
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Who Is Authorized to Sign the Agreement

Individual Borrower

An individual borrower signs personally and must provide government ID and SSN/TIN verification; if signing on behalf of an estate or trust, include proof of appointment or trustee authorization and attach supporting documentation.

Authorized Officer

For corporate or LLC borrowers, an authorized officer or manager must sign, include printed title and authority statement, and attach a corporate resolution or power of attorney demonstrating signing authority on behalf of the entity.

Key Deadlines and Processing Expectations

Key deadlines and processing expectations ensure compliance with tax reporting and closing timetables for borrower disclosures.

Signing Deadline:

Before closing or as contract requires.

Tax Reporting:

Provide W-9 on request to avoid backup withholding.

Recordation Window:

Record mortgages promptly to protect lien priority.

Notary Retention:

Retain notary journal entries per state rules.

eSignature Audit:

Audit trail saved at signing and kept with file.

Practical Tips to Complete the Agreement Accurately

Follow these best practices to reduce errors, speed approval, and strengthen legal defensibility of the Borrower Disclosure Agreement.

Use full legal names and entities
Always enter borrower and lender legal names exactly as on formation documents or government IDs; verify EIN/SSN/TIN against official records to prevent tax reporting errors and backup withholding triggers.
Standardize date and currency formats
Require MM/DD/YYYY for dates and use numerals plus words for currency amounts to avoid ambiguity; automate format validation in digital forms to reduce manual correction and processing delays.
Attach exhibits: collateral schedules and fee lists
Attach collateral schedules, fee breakdowns, and payment instructions as numbered exhibits; cross-reference exhibit numbers in the main body to ensure consistency and simplify review.
Verify signer identity and authority documentation
Obtain government ID, corporate resolutions, or power of attorney when appropriate; for electronic signatures, use two-factor authentication or KBA for higher-risk transactions to strengthen attribution.

Digital Signing, Integrations, and Security Considerations

eSignature and eSubmission streamline execution; confirm platform features, authentication options, and secure storage before sending a Borrower Disclosure Agreement.

  • Integrations: Salesforce | NetSuite | Google Workspace
  • Formats Supported: PDF | DOCX | HTML | XLSX
  • Security Standards: TLS 1.2/1.3, AES-256

Real-World Examples of Borrower Disclosure Workflows

Examples show how the Borrower Disclosure Agreement is used across lending scenarios and the benefits of accurate completion.

Optica Ventures — Closing Efficiency

Optica Ventures implemented an electronic Borrower Disclosure Agreement workflow to reduce manual processing and support remote closings.

  • The interface is simple and easy to use.
  • Brian Fitzgibbons, COO, said the system is easy for both staff and customers, accelerating signings, supporting underwriting reviews, reducing errors, and preserving secure audit trails for compliance and record retention obligations.

Martin Properties — Remote Closings

Martin Properties used electronic borrower disclosures to conduct closings without in-person meetings and to centralize executed records.

  • Process and execute online with 100% compliance.
  • Founder Tim Martin reported faster turnaround, consistent compliance controls, and reliable offline signing support for mobile agents, allowing quicker loan funding and clearer audit records and regulatory inspections.

Frequently Asked Questions About Borrower Disclosure Agreements

Answers to frequent questions about executing, signing, and storing the Borrower Disclosure Agreement electronically and handling compliance exceptions.


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