Starting August 1, 2015 real estate closings in North Carolina will no longer use the HUD-1 Settlement Statement at closings. Instead, two new forms called the Loan Estimate and Closing Disclosure will take its place.
The HUD-1 (Department of Housing and Urban Development) Settlement Statement has long been used to itemize all closing charges for the buyer and seller in a real estate transaction. The HUD-1 gives a detailed, “down to the penny” listing of all incoming and outgoing funds associated with that transaction
According to the North Carolina Real Estate Commission, “In the past, lenders of “federally related mortgage loans” have been required to provide borrowers with a Good Faith Estimate (GFE) and early Truth-in-Lending (TIL) disclosure, and a final Truth-in-Lending disclosure and HUD-1 at closing”.
But, “one of the direct charges to the Consumer Financial Protection Bureau under Dodd-Frank was to consolidate these disclosures to ease compliance burdens on lenders” adds the Commission.
“There are two Closing Disclosure forms: one is a two-page form containing a transaction summary reflecting only seller-paid expenses and amounts due to and from the seller, while the second Closing Disclosure is five pages and contains information about the loan terms, borrower expenses, by whom those items are paid, and a summary of monies due to and from both the buyer and the seller”. H/T NCREC
So, effective August 1, 2015, lenders must use the new “Loan Estimate” disclosure that combines the former GFE and TIL disclosures. Lenders and settlement agents must start using the new “Closing Disclosure” forms in lieu of the current HUD-1.
Although there will be more paperwork involved on the plus side buyers and sellers will be able to get copies of it quicker. With the HUD-1 Settlement Statement lenders were required to have the information available within 24 hours of closing. With the new Closing Disclosure forms lenders now must have all settlement statement information available up to 3 days before the closing.
All in all these new forms should be of great benefit for everyone involved with a real estate closing. Instead of 1 day to review costs and expenditures associated in buying real estate you will now have 3 days.
For complete information about this or any real estate questions contact Margaret Hitchcock at (252) 269-2893. Margaret is a real estate professional and a Realtor with many years experience. Whether it is primary, secondary, short sale or foreclosure Margaret Hitchcock with Hitchcock Realty has the working knowledge, skills and professionalism to make your transaction successful!