2015 Closing Disclosure

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blog-author-clayjeffreys3

Along with a new Good Faith Estimate (see my recent post on the 2015 GFE), there is a new HUD-1 . The HUD-1 is more commonly known as the settlement statement, but will be referred to as the “Closing Disclosure” beginning in August of this year.

Just like the GFE, the Closing Disclosure is combining a couple of closing documents into one form. Even with the Closing Disclosure going from three to five pages, the total number of pages should stay roughly the same.

More on this in a moment. First, let’s talk about the one aspect of the new Closing Disclosure that will be very problematic. Beginning with these new disclosures, borrowers must be given a final Closing Disclosure at least three business days prior to closing.

This is not an April Fool’s joke, and the three day requirement will be the single toughest aspect for lenders, loan originators, closing attorneys, real estate agents, etc. to implement. Currently, if a closing is scheduled for Wednesday, and closing documents go out on Wednesday, we can close on Wednesday.

Not anymore. If closing documents go out late on Wednesday, a Closing Disclosure probably would not be approved until the following business day. Then the closing will have to be scheduled three business days after the final Closing Disclosure was approved. That means this example of a Wednesday closing just got moved into the following week.

The best way to approach this change is to add more days to the closing time frame until everyone (lenders, attorneys, agents, etc.) get accustomed to the three day requirement on the Closing Disclosure. Well, add time and be patient.

As for the components of the Closing Disclosure itself, they are pretty straight forward. Click the link to view the new Closing Disclosure.

The first page of the Closing Disclosure replaces the Truth in Lending document from closing. Pages 2 and 3 are essentially the first two pages of the current HUD-1. The fourth page provides a nice summary of the loan terms, explanations, and goes into more details about the escrow account. The fifth page is essentially the third page of the current HUD-1.

The Consumer Finance Protection Bureau attempted to simplify the loan details for consumers. For the most part, they succeeded with the implementation of the new GFE and Closing Disclosure later this year. Other than getting used to the new 3 day requirement for issuing the Final Closing Disclosure, these changes should make the loan details easier to understand for consumers.

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One Response to “2015 Closing Disclosure”

  1. TRID implementation delayed | The Mortgage Blog Says:

    […] Closing Disclosure […]

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