As mandated by the Consumer Financial Protection Bureau (CFPB), beginning in August 2015 the HUD-1 and Truth-in-Lending statements will be replaced by one single new closing disclosure form, to be provided to consumers three days prior to a home closing transaction.

The current HUD-1 settlement statement serves to provide the seller of a home, and the consumer who is borrowing funds to purchase the home, with an itemization of the myriad costs that comprise the transaction. It must “…explicitly state all costs involved with the real estate loan and to whom the individual charges and fees will be paid to,” and is currently required to be provided to the buyer one day prior to the closing.

The new closing disclosure form that consumers will see beginning in August 2015 will combine the information that is on the current HUD-1 and the Truth-in-Lending statements. The Truth-in-Lending disclosure now in use is provided to give buyers a “…meaningful disclosure of credit terms so that the consumer will be able to compare the various credit terms available and avoid the uninformed use of credit,” including the annual percentage rate.

According to CFPB spokesman Sam Gilford, in addition to the simplicity achieved by combining the two statements, the goal of the change in forms is largely addressed by the earlier time frame in which the new form must be presented to the consumers. This is to “…ensure that consumers can review their final loan terms and costs before sitting down at the closing table, and gives them time to ask questions.” The CFPB suggests that this additional time should be used specifically to compare the information on the statement to the information on the loan estimate form, which will be replacing the current Good Faith Estimate. The new loan estimate form will be provided to prospective buyers within three days of applying for a loan.

Whether a buyer will be closing on a new home before or after these changes take place, experts emphasize the importance of being in touch with one’s title company throughout the entire process. The Washington Post reports that this is because, “The title company comes into play after the contract is written and is typically chosen by the buyers.”

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