The days of the 2-page HUD-1 settlement statement and attached, lender-based Good Faith Estimate (GFE) form are about to become a thing of the past. As of August 1, 2015, these two forms will be replaced by the newly designed Closing Disclosure and Loan Estimate forms.
The Consumer Financial Protection Bureau (CFPB), which took over administration of the Real Estate Settlement Procedures Act (RESPA) from HUD, has implemented the upcoming changes in forms. These two forms are set to replace the HUD-1 and GFE in order to provide a more concise reorganization of the information contained therein. Due, in part, to borrower’s confusion in reviewing the information provided at closing, these new forms will attempt to ease borrower frustration and more easily allow them to access the information of their closing.
The impending form changes will also require changes to relocation policy wording, as most policies contain references to the old HUD-1 form. If any of your relocation policies reference the HUD-1, the wording should be changed to indicate the Closing Disclosure form. Typically references to the HUD-1 form would be found in the home sale and new home closing costs benefit sections of most policies.
Overall, the Loan Estimate and Closing Disclosure forms appear to be an improvement over the existing disclosures. Once lenders, consumers, attorneys, and settlement agents become more comfortable with the new documents, they will hopefully assist in allowing the residential mortgage application process and closings in general to become much more of a seamless process.
For more information on the new Closing Disclosure and Loan Estimate forms, please visit www.CFPB.gov and type the form names into the search window