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We're about to see some big changes regarding the delivery of HUD-1 Settlement Statements and Truth-in-Lending Disclosures, which could result in added cost and closing delays for homebuyers, if the Consumer Financial Protection Bureau's new rules go into effect as proposed.
The CFPB rule would merge the HUD-1 and TILA forms, which together total five pages, into a single five-page document known as a Closing Disclosure form. One of the options under the proposed rule would require lenders to prepare and deliver the Closing Disclosure to consumers instead of settlement companies.
Allowing this rule to go into effect will likely wind up costing the consumer more while upping the chances for settlement delays, which is why I'm encouraging you to take a minute by November 6 to voice your comments to the CFPB.
How will the new CFPB requirements effect the settlement transaction?
Compared to the current HUD-1, the proposed Closing Disclosure re-categorizes and re-numbers all closing costs and prepaid items, rendering current settlement software, merge documents and disbursement coding useless while delivering very little (if any) benefit to the consumer.
Lenders and settlement service providers already invested substantially in upgrades for software and re-training of staff about three years ago ... more
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