Big Changes to the HUD-1 as of August 1, 2015

Over the years the HUD-1 Settlement Statement

for real estate transactions had has numerous changes made to how the settlement statement is created.  This change that takes effect on August 1, 2015 will change the HUD-1 so much that it will no longer be called the HUD-1 settlement statement.  The new name for the closing document is the "Closing Disclosure".  

Why You Ask?
Because the Dodd-Frank Act of 2010 mandates the combination of the Truth In Lending Act (TILA) loan disclosures with the Real Estate Settlement Procedures Act (RESPA) Good Faith Estimate (GFE) and the Hud-1 Settlement Statement disclosures.  In essence, it is all in one Closing Disclosure. 

Whats Different?
The main change is that the "Closing Disclosure"

is to be issued 3 Days Prior to Closing and the CFPB -Consumer Financial Protection Bureau can levy substantial penalties of up to $5,000 per day for any violation of law, rule, or final order or condition imposed by the writing bureau. Up to $25,000 per day for any person that recklessly engages in a violation of a Federal consumer financial law and up to $1,000,0000 per day for any person who knowingly violates a Federal consumer financial law.

With the 3 Business Day waiting period, if a change needs to be made to the closing disclosure there are certain instances where a new 3 Business Day waiting period will be required after the change is made. I suggest you know these circumstances and as early as June you start telling your customers or clients about the changes.  The 3 Business Day waiting period can easily delay a closing by as long as a calendar week if there is a holiday in that week. I suggest you schedule Monday closings as often as possible. 

The Form itself is a nice change. It is larger in print, more defined as to the sections and it is alphabetized as opposed to the old "line numbers". I think the consumers will find the new Closing Disclosure much easier to read and understand. There are more changes I chose not to talk about here and I suggest you find out as much information on the Closing Disclosure as possible but I wanted to mention my favorite change, the closing will no longer be called a closing.  The new term for the closing is "Consummate" 
Thats Right....Buyer and Seller will Consummate their transaction. 
written by Michael J. Gallo - Some information may change prior to August 1, 2015. I advise you research the topic and get as much information as possible.