NAR News: The New Truth-in-Lending Integrated Disclosure Act Replaces HUD-1 Settlement Statement

Finley Maxson, the Senior Counsel for the National Association of Realtors (NAR), explains the key new changes that will surely affect the world of real estate beginning August 1st, 2015.

Going forward, those real estate transactions that compel a buyer to secure a mortgage will be required to utilize the new disclosure forms created by the “CFPB” (Consumer Financial Protection Bureau). The National Association of Realtors has provided detailed information this topic on REALTOR.org, thereby allowing this post to highlight a video produced by NAR and to quickly encapsulate the many changes – thereby focusing on just how those changes might alter your next St. George real estate transaction.

NAR’s new Truth-in-Lending Act / RESPA Integrated Disclosures creates a whole new set of timing requirements and liabilities. Obligating lenders to be much more concise in their preparation of loan doc disclosures for today’s consumers.

Now held to a higher standard, the connection between the mortgagee and others involved in the transaction –like the closing agent and the mortgage broker – will be forever altered as the lender could be considered responsible if certain costs surpass the acceptance limitations set forth in the Truth-in-Lending Disclosures (TRID).

With the new TRID requiring a three-day waiting period prior to closing, many suspect these changes may create new lender delays.

Thanks to the Dodd-Frank Act enacted July 21, 2010, the US Congress required the establishment of the Truth-in-Lending Disclosures as a means of improving consumer protection and the disclosures made to potential borrowers. The TRID combines the familiar TILA (Truth In Lending Act) and RESPA (Real Estate Settlement Procedures Act) into two new forms: the Loan Estimate and the Closing Disclosure. These two new disclosures will be required in all transactions involving home loans beginning August 1st, 2015.

According to Realtor.com the two new mortgage disclosure forms will do the following:

  • Loan estimate. This form replaces both the early Truth in Lending statement and the good-faith estimate and provides a summary of loan terms as well as estimated loan and closing costs. Buyers must receive this three days after applying for a loan, so they can have time to shop around.
  • Closing disclosure. This form replaces both the final Truth in Lending statement and the HUD-1 settlement statement. It sums up the final costs for the loan and closing and explains how payments are to be made. Buyers must receive this three days before closing, so they have enough time to fully review it.

NAR News: The New Truth-in-Lending Integrated Disclosure Act Replaces HUD-1 Settlement Statement