New Mortgage Disclosures
As of August 1, 2015 the mortgage finance closing process will completely change. Up until now the bank attorney or settlement agent has always been responsible for the preparation and delivery of the HUD-1 settlement statement. This right has been protected under RESPA laws.
However, effective in August, 2105 the HUD-1 along with the current Truth In Lending Disclosure (TIL) and Good Faith Estimate (GFE) will no longer be used.
Instead, two new documents will be introduced. The first document will be the loan estimate consisting of three pages. The second document will be the closing disclosure consisting of five pages.
The lender, not the settlement agent, will be responsible for the preparation and delivery of the forms as well as their accuracy. Lenders will continue to work with the settlement agent to gather the necessary information required to produce and deliver the accurate forms.
Although August 1, 2015 is the official date, most banks will have their systems in place as early as Spring 2015.
One of the most important factors surrounding the new forms is the fact that they must be delivered to the borrower three business days prior to closing. Up until now, borrowers have normally received their closing documents on the day of closing (signing day).
While it may be difficult to get all of the closing information gathered together three days prior to closing, the hope is once the process has been in effect for a period of time, the closing process as a whole will be improved. Borrowers will be informed of their final closing figures earlier and settlement agents will have their closing packages three days in advance of closing.
Rosemary Liuzzo Mohamed prepared this brief on behalf of Adam Leitman Bailey, P.C.