The Consumer Financial Protection Bureau created two new forms that went into effect for all loans underwritten as of October 3, 2015. They combined the Good Faith Estimate and estimated TILA into a new Loan Estimate (abbreviated LE), the HUD-1 Settlement Statement, and the final TILA into the Closing Disclosure Form (abbreviated now as CD or CDF). The creditor is responsible for delivering the Closing Disclosure form to the consumer, but the final rule allows the lender to either prepare the Closing Disclosure form or share responsibility with the settlement agent. Some creditors may even use the settlement agents to prepare the Closing Disclosure, provided the settlement agent complies with the final rule’s requirements. We provide this service to our lender clients upon request.
The line numbering on the HUD-1 familiar to most of us is gone. Instead, the fees
and charges are placed on the Closing Disclosure in one of seven areas:
Individual charges within each of these major groupings are listed alphabetically. Columns are provided to separate charges of buyer, seller, and others, as well as columns for payments both before and at closing.
The Closing Disclosure, as it’s called, lays out all of the critical terms of your loan and replaces the old, more confusing HUD-1 Settlement Statement.
And while consumers usually didn’t get a chance to review the HUD-1 until they arrived at the loan closing, the new document must be presented at least three days prior to signing on the dotted line.
That should give borrowers plenty of time to compare the final terms they’re accepting — including such key elements as the interest rate and closing costs — to what they were promised when they applied for the mortgage.
By matching information on the Closing Disclosure to that on the Loan Estimate they received at the start of the process, consumers can quickly tell if anything has changed.