Residential Real Estate Closings
Changes Are Coming
Beginning August 1, 2015*, creditors and settlement agents will have new disclosure forms to provide consumers, under a federal law mandating a revision of existing forms. For those of you familiar with the current system, the existing Truth in Lending Act (“TILA”) and Real Estate Settlement Procedures Act (“RESPA”) each have required creditors and settlement agents to provide certain forms to consumers before or at closing. You know these forms as the RESPA Good Faith Estimate, Initial Truth-in-Lending Disclosure, HUD-1, and Final Truth-in-Lending Disclosure. The information on these forms was redundant, the language often inconsistent, and consumers had trouble understanding them. The Dodd-Frank Wall Street Reform and Consumer Protection Act required the Consumer Financial Protection Bureau to streamline the information on these forms. The end result of this streamlining is essentially that the previous RESPA Good Faith Estimate and Initial TIL forms have been combined into the “Loan Estimate,” and the HUD-1 and Final TIL have been combined into the “Closing Disclosure.” This is known as the “TILA-RESPA” rule.