The Closing Disclosure Form: A Reference

By, Steven Walker, ATG Law Clerk

Introduction

Federal law has required lenders provide two different disclosure forms at, or shortly before, a closing on a mortgage loan. Two different Federal agencies developed these forms separately, under two Federal statutes: the Truth in Lending Act (TILA), under Regulation Z (12 CFR Part 226), and the Real Estate Settlement Procedures Act of 1974 (RESPA), under Regulation X (12 CFR Part 1024). The information on the forms was overlapping and the language was inconsistent, with consumers often find the forms confusing. Further, lenders and settlement agents found the forms burdensome to provide and explain.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directed the Consumer Financial Protection Bureau (CFPB) to integrate the mortgage loan disclosures under TILA and RESPA sections 4 and 5 respectively. The Dodd-Frank Act mandated that the CFPB propose rules and model disclosures that integrated the TILA and RESPA disclosures by July 21, 2012. (Public Law 111-203 § 1032(f), 111th Congress; See also 12 U.S.C. § 5491) The CFPB issued a proposed rule and forms on July 9, 2012 after engaging in extensive consumer and industry research, analysis of public comment, and public outreach. After issuing the proposal, the CFPB conducted a large-scale quantitative validation study which concluded that the CFPB's integrated disclosures had on average statistically significant better performance than the current disclosures under TILA and RESPA. The CFPB has finalized a rule with new, integrated disclosures which will provide a detailed explanation of how the forms should be filled out and used.

The new Closing Disclosure Form (CDF) is of central relevance to title insurers and agents. The CFPB designed the form to provide disclosures that would be helpful to consumers in understanding all of the costs of the mortgage loan transactions. The new form must be provided to consumers three (3) business days before they close on the loan. Additionally, the form uses clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to compare the cost of different loan offers, including the cost of the loans over time.

In developing the new Loan Estimate and CDF, the CFPB has reconciled the differences between the existing forms and combined several other mandated disclosures, such as the appraisal notice under the Equal Credit Opportunity Act and the servicing application disclosure under RESPA. The CFPB also has responded to industry complaints of uncertainty about how to fill out the existing forms by providing detailed instructions on how to complete the new forms. This should reduce the burden on lenders and others in preparing the forms in the future. See ATG Casenotes and Undeerwriters’ Bulletin article, “The Real Estate Settlement Procedures Act (RESPA).”

The title industry has many concerns about the CDF, its implications for the closing process and its implementation. This article will explain where to look in statutes and regulations to understand the CDF’s central features and requirements.

Purpose

Under §§ 1098 and 1100A of the Dodd-Frank Act (codified at 12 U.S.C. 2063(a) and 15 U.S.C. 1604(b)), the CFPB was directed to publish rules and forms that combine certain disclosures consumers receive when applying for and closing on a mortgage loan under TILA and RESPA. The CFPB therefore amended Regulation X of RESPA and Regulation Z of TILA, establishing new disclosure requirements and forms in Regulation Z for most closed-end consumer credit transactions secured by real property. The final rule also provides extensive guidance regarding compliance with those requirements.

Scope

12 CFR Parts 1024 and 1026 apply to most closed-end consumer mortgages. It does not apply to home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property. Further, the final rule does not apply to loans made by a creditor who makes five (5) or fewer mortgages in a year.

Mortgages exempted from the application of the new CDF will still require the following forms and disclosure requirements:

  1. Home Equity Lines of Credit
    • If the loan involves an open-end line of credit, providing the disclosures required by Regulation Z satisfies the RESPA good faith estimate (GFE) and the HUD-1 or HUD-1A requirements.
    • Both subordinate lien loans and open-end lines of credit (home equity loans) in first lien position are exempted from the loan servicing requirements.
    • TILA’s three-day consumer cancellation period also applies.
  2. Reverse Mortgages
    • Lenders are still required to provide a HUD-1 form and a GFE as dictated under RESPA
    • TILA’s general requirements under 12 CFR 1026.31 also continue to apply, including: (1)“The creditor shall furnish the disclosures required by § 1026.32 at least three business days prior to consummation or account opening of a high-cost mortgage as defined in § 1026.32(a)”; and (2) must be made clearly and conspicuously in writing, in a form that the consumer may keep and in compliance with specific timing requirements.
  3. Chattel Dwelling (Mobile Home) Loans
    • RESPA and applicable HUD forms and GFE requirements apply, but only if the manufactured home is located on real property on which the lender's interest is secured by a lien.

References

FAQs About RESPA for Industry, U.S. Department of Housing and Urban Development (Mar. 23, 2010), http://www.hud.gov/offices/hsg/ramh/res/resindus.cfm;

See also New RESPA Rule FAQs, U.S. Department of Housing and Urban Development (last accessed July 24, 2015), http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf;

HELOC Lender Obligations Under the Truth in Lending Act, HELOC Basics (last accessed July 24, 2015), http://www.helocbasics.com/heloc-lender-obligations-under-the-truth-in-lending-act/;

Comptroller’s Handbook – Consumer Compliance: Truth in Lending Act, Office of Comptroller of Currency (Dec., 2014) http://www.occ.gov/publications/publications-by-type/comptrollers-handbook/truth-in-lending-handbook.pdf;

12 C.F.R. § 1026.40 (Requirements for home equity plans);

12 C.F.R. § 1026.33 (Requirements for reverse mortgages).

As the CFPB notes in the finalized rule, “[1] Reverse mortgages…While the final rule exempts reverse mortgage loans from the integrated disclosure requirements of § 1026.19(e) and (f), it declines to exempt them completely from RESPA…the Bureau is finalizing amendments to Regulation X to incorporate certain guidance in the HUD RESPA FAQs regarding the completion of the RESPA GFE and the RESPA settlement statement for reverse mortgage transactions. [2] HELOCs…HELOCs are open-end credit plans and therefore are subject to different disclosure requirements than closed-end credit transactions under Regulation Z. In recognition of the distinct nature of open-end credit, Regulation X effectively exempts such plans from the RESPA disclosure requirements. Sections 1024.6(a)(2) and 1024.7(h) of Regulation X state that, for HELOCs, the requirements to provide the “special information booklet” regarding settlement costs and the RESPA GFE, respectively, are satisfied by delivery of the open-end disclosures required by Regulation Z. Regulation X § 1024.8(a) exempts HELOCs from the RESPA settlement statement requirement altogether. [3] Chattel-dwelling loans…Excluding them from coverage of these integrated disclosures…[does] not excuse them from TILA's disclosure requirements. Rather, they would remain subject to the existing closed-end TILA disclosure requirements under § 1026.18. Excluding chattel-dwelling-secured loans from the integrated disclosure requirements means they would not be subjected by this rulemaking to certain new disclosure requirements added to TILA section 128(a) by the Dodd-Frank Act.” Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z), 78 FR 79730-01; See also HUD Reverse Mortgage Purchase Facts, U.S. Department of Housing and Urban Development (last accessed July 07, 2015), http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/faqs_hecm.; HUD Financing Manufactured (Mobile) Homes, U.S. Department of Housing and Urban Development (last accessed July 07, 2015), http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/title/repair. The proposed rule also would not have applied to loans made by a creditor who makes five or fewer mortgages in a year. 78 FR 79730-01. In addition, the proposed rule would have amended portions of Regulation X, for consistency with the proposed amendments to Regulation Z.

Effective Date

The final rule is proposed to go into effect on October 3, 2015, although an August 1, 2015 date was initially announced. The final rule applies to transactions for which the creditor or mortgage broker receives an application on or after that date. However, § 1026.19(e)(2) and the amendments to § 1026.28(a)(1) and the commentary to § 1026.29 become effective regardless of whether an application has been received on the effective date.

Closing Disclosure Form – General Requirements

The Closing Disclosure Form (CDF) replaces the current form used to close a loan, the HUD-1, which was designed by the Department of Housing and Urban Development (HUD) under RESPA, other than for the excluded transactions discussed, above. It also replaces the revised Truth in Lending disclosure designed by the Board under TILA. The CDF contains additional new disclosures required by the Dodd-Frank Act and a detailed accounting of the settlement transaction. Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z), 78 FR 79730-01. Note, however, that RESPA remains applicable to only federally-related mortgage loans for residential (1-4 family) property. See ATG Casenotes and Undeerwriters’ Bulletin article, “The Real Estate Settlement Procedures Act (RESPA).”

Timing. The creditor must give consumers the CDF at least three (3) business days before the consumer closes on the loan. Id. If the creditor makes certain significant changes between the time the CDF is given and the closing—specifically, if the creditor (1) makes changes to the APR above of a percent for most loans, (2) changes the loan product, or (3) adds a prepayment penalty to the loan—the consumer must be provided a new form and an additional three-business-day waiting period after receipt of the new form. Id. Less significant changes can be disclosed on a revised CDF provided to the consumer at or before closing, without delaying the closing. Id.

Provision of Disclosures. Previously settlement agents were required to provide the HUD-1 under RESPA, while creditors were required to provide the revised Truth in Lending disclosure under TILA. Under the final rule, the creditor is responsible for delivering the CDF to the consumer. Id.. However, creditors may use settlement agents to provide the Closing Disclosure, provided both parties comply with the final rule's requirements for the Closing Disclosure. Id.

Limits on Closing Cost Increases. The final rule restricts the circumstances in which consumers can be required to pay more for settlement services (appraisals, inspections, etc.) than the amount stated on their Loan Estimate form. Unless an exception applies, charges for the following services cannot increase:

  • The creditor's or mortgage broker's charges for their own services;
  • Charges for services provided by an affiliate of the creditor or mortgage broker; and
  • Charges for services for which the creditor or mortgage broker does not permit the consumer to shop.

Id. Charges for other services can increase, but generally not by more than 10 percent, unless an exception applies. The exceptions include, for example, situations when:

  • The consumer asks for a change;
  • The consumer chooses a service provider that was not identified by the creditor;
  • Information provided at application was inaccurate or becomes inaccurate; or
  • The Loan Estimate expires.

When an exception applies, the creditor must generally provide an updated Loan Estimate form within three (3) business days. Id.

Closing Disclosure Form – Specific Form Requirements

Loan Terms

12 CFR § 1026.38(b); See 12 CFR § 1026.37 for specific requirements.

On a CDF there should be a separate table under the heading “Loan Terms” that contains the following, if applicable, labeled on the form per their title description:

  1. Loan amount.
  2. Interest rate.
  3. Principal and interest payment.
  4. Prepayment penalty. “Prepayment penalty” means a charge imposed for paying all or part of a transaction's principal before the date on which the principal is due. There is an exception for waived, bona fide third-party charges that the creditor imposes if the consumer prepays all of the transaction's principal sooner than 36 months after consummation.
    1. The maximum amount of the prepayment penalty imposed and the date when the penalty is terminated.
  5. Balloon payment. “Balloon payment” means a payment that is more than two times a regular periodic payment. “Balloon payment” includes the payment or payments under a transaction that requires only one or two payments during the loan term.
    1. The maximum amount of the balloon payment and the due date of such payment.
  6. Adjustments after consummation, which include [1] adjustment in loan amount, [2] adjustment in interest rate, and [3] increases in periodic payments. The date required for disclosure of adjustments to interest rates after consummation is the year when interest for the first scheduled periodic payment begins to accrue after consummation. Adjustments in the loan amount and increases in periodic payments must be disclosed in the year in which they occur, counting from the due date of the initial adjustment or increase.

Projected Payments

12 CFR § 1026.38(c)

In a separate table under the heading “Projected Payments,” the form should include [1] projected payments or range of payments, and [2] estimated taxes, insurance, and assessments. For transactions subject to RESPA, the projected or range of payments is determined under the escrow account analysis described in Regulation X (12 CFR 1024.17). For transactions not subject to RESPA, use of the escrow account analysis described in Regulation X (12 CFR 1024.17) or in the manner set forth in Content of disclosures for certain mortgage transactions (Loan Estimate) (12 CFR § 1026.37(c)(5)) are permitted.

Cost at Closing

12 CFR § 1026.38(d)

In a separate table, under the heading “Costs at Closing,” list [1] the sum of the dollar amounts (titled “Closing Costs”) disclosed the following:

  1. A statement that the amount disclosed closing costs;
  2. The dollar amount disclosed under the section labeled “Loan Costs”; (12 CFR § 1026.38(f)(4))
  3. The dollar amount disclosed under the section labeled “Other Costs”; (12 CFR § 1026.38 (g)(5))
  4. The dollar amount disclosed under the section labeled “Lender Credits”; (12 CFR § 1026.38(h)(3)) and
  5. A statement referring the consumer to the tables (disclosed pursuant 12 CFR § 1026.38(f), (g)).

[2] the form should also include a section labeled “Cash to Close.” Under this section, list the sum of the dollar amounts calculated under the subheading “Final,” including the sum of the amounts calculated from 12 CFR § 1026.38(i). Pursuant to 12 CFR § 1026.38(i), in a separate table, under the heading “Calculating Cash to Close,” together with the statement “Use this table to see what has changed from your loan estimate,” the CDF must provide:

  1. Total closing costs;
  2. Closing costs paid before closing;
  3. Closing costs financed;
  4. Down payment/funds from borrower;
  5. Deposit;
  6. Funds for borrower;
  7. Seller credits; and
  8. Adjustments and other credits.

The specific process for calculating the “Cash to Close” is provided under 12 CFR § 1026.38(i). Additionally, a statement indicating the amount disclosed under the “Cash to Close” and “Closing Costs” sections must be included, as well as a statement referring the consumer to the table required pursuant to 12 CFR § 1026.38(i). For transactions that do not involve a seller and where the creditor disclosed the optional alternative table pursuant to 12 CFR §  1026.37(d)(2), the creditor must disclose, with the label “Cash to Close,” the sum of the dollar amounts under the “Cost at Closing.” This includes:

  1. The amount calculated in accordance with 12 CFR § 1026.38(e)(5)(ii);
  2. A statement of whether the disclosed amount is due from or to the consumer; and
  3. A statement referring the consumer to the table required pursuant 12 CFR § 1026.38(e).

Closing Cost Details; Loan Costs

12 CFR § 1026.38(f),(g)

A CDF, under the master heading “Closing Cost Details,” must provide columns stating whether [1] the charge was borrower-paid at or before closing, [2] seller-paid at or before closing, or [3] paid by others.  Further, the form must include all loan costs associated with the transaction, listed in a table under the heading “Loan Costs.” The table shall contain the items and amounts under four subheadings and filled out in accordance with applicable information:

  1. Origination charges.
  2. Services the borrower did not shop for.
  3. Services the borrower did shop for.
  4. Subtotal and Total loan costs.

Additionally, under the master heading “Closing Cost Details” the disclosure should include another heading titled “Other Costs.” Under the “Other Costs” header five subheadings should be included and filed out in accordance with applicable information:

  1. Taxes and other government fees.
  2. Prepaids (The total of itemized amounts that are designated borrower-paid at or before closing).
  3. Initial escrow payment at closing.
  4. Other (Itemizations of each amount for charges in connection with the transaction that are in addition to charges required by name).
  5. Subtotal and Total “Other Costs.”

Closing cost totals are calculated using the process provided under 12 CFR § 1026.38(h).

Summary of Borrower’s Transaction

12 CFR § 1026.38(j)

The CDF should provide, under the heading “Summaries of Transactions” and with a statement to “Use this table to see a summary of your transaction,” two [2] separate tables. The first table must include, under the subheading “Borrower's Transaction,” the following information and shall satisfy the following requirements:

  1. Itemization of amounts due from borrower.
  2. Itemization of amounts already paid by or on behalf of the borrower.
  3. Calculation of borrower’s transaction under the label “Calculation”
  4. Items paid outside of closing funds.

Additional subprocesses and subheadings are required, please see 12 CFR § 1026.38(j)(1)-(4) for additional information, or the links provided below which include sample forms.

Summary of Seller's Transaction

12 CFR § 1026.38(k)

Under the heading “Summaries of Transactions,” a separate table under the subheading “Seller's Transaction,” that includes the following information and satisfies the following requirements:

  1. Itemization of amounts due to seller.
  2. Itemization of amounts due from seller.
  3. Calculation of seller’s transaction under the label “Calculation.”
  4. Items paid outside of closing funds.

Additional subprocesses and headings are required, please see 12 CFR § 1026.38(k) for additional information, or the links provided below which include sample forms.

Loan Disclosures

12 CFR § 1026.38(l)

Under the master heading “Additional Information About This Loan” and under the heading “Loan Disclosures,” a CDF must provide the following information:

  1. Assumption (See 12 CFR § 1026.37(m)(2)).
  2. Demand feature.
  3. Late payment (See 12 CFR § 1026.37(m)(4)).
  4. Negative amortization.
  5. Partial payment policy.
  6. Security interest.
  7. Escrow account (See 12 CFR § 1026.37(c)(4)(ii)).

Additional subprocesses and headings are required, please see 12 CFR § 1026.38(l) for additional information, or the links provided below which include sample forms.

Adjustable Payment Table

12 CFR § 1026.38(m)

Under the master heading “Additional Information About This Loan” required by paragraph (l), and under the heading “Adjustable Payment (AP) Table,” the table required to be disclosed by 12 CFR § 1026.37(i) should be inserted.

Adjustable Interest Rate Table

12 CFR § 1026.38(n)

Under the master heading “Additional Information About This Loan” required by paragraph (l), and under the heading “Adjustable Interest Rate (AIR) Table,” the table required to be disclosed by 12 CFR § 1026.37(j) should be inserted.

Loan Calculations

12 CFR § 1026.38(o)

A CDF must, under a separate table under the heading “Loan Calculations,” provide the following:

  1. Total of payments.
  2. Finance charge.
  3. Amount financed.
  4. Annual percentage rate.
  5. Total interest percentage.

Additional subprocesses and headings are required, please see 12 CFR § 1026.38(o) for additional information, or the links provided below which include sample forms.

Other Disclosures

12 CFR § 1026.38(p)

A CDF must provide a heading titled “Other Disclosures.” Under this heading, the form must list the following with individual subheadings for each:

  1. Appraisal (For transactions subject to 15 U.S.C.A. § 1639h [‘Property appraisal requirements’] or 15 U.S.C.A. § 1691(e) [‘Scope of Prohibition’ under the Equal Credit Opportunity Act])
  2. Contract details, e.g., information about nonpayment, what constitutes a default under the contract, circumstances under which the creditor may accelerate the maturity of the obligation, and prepayment rebates and penalties.
  3. Liability after foreclosure.
  4. Refinance (See 12 CFR § 1026.37(m)(5)).
  5. Tax deductions.

Additional subprocesses and headings are required, please see 12 CFR § 1026.38(p) for additional information, or the links provided below which include sample forms.

Questions Notice

12 CFR § 1026.38(q)

Under a separate notice labeled “Questions?” the following should be provided:

  1. A statement directing the consumer to use the contact information disclosed under 12 CFR § 1026.38(r) if the consumer has any questions about the disclosures required pursuant to 12 CFR § 1026.19(f).
  2. A reference to the CFPB’s web site to obtain more information or to submit a complaint; and the link or uniform resource locator address to the Web site: www.consumerfinance.gov/mortgage-closing; and
  3. A prominent question mark.

Contact Information

12 CFR § 1026.38(r)

A CDF must provide a heading labeled “Contact Information.” Under that heading there should be a table with information for each creditor, mortgage broker, consumer’s real estate broker, seller’s real estate broker, and settlement agent participating in the transaction. The following information should be provided for each applicable party:

  1. Name of the person, labeled “Name”;
  2. Address, labeled “Address”;
  3. Nationwide Mortgage Licensing System & Registry identification number (‘NMLSR ID’), labeled NMLSR ID, or, if none, license number or other unique identifier issued by the applicable jurisdiction or regulating body with which the person is licensed and/or registered, labeled “License ID,” with the abbreviation for the State of the applicable jurisdiction or regulation body stated before the word “License” in the label, for the persons named under “Contact Information.”
  4. Name of the natural person who is the primary contact for the consumer with the person identified in under “Name”, labeled “Contact.”;
  5. Email address for the person identified under “Contact,” labeled “Email”; and
  6. Telephone number for the person identified in under “Contact,” labeled “Phone.”

Signature Statement

12 CFR § 1026.38(s)

At the creditor's option, under the heading “Confirm Receipt,” a line for the signatures of the consumers in the transaction may be included. If the creditor provides a line for the consumer's signature, the creditor must disclose above the signature line the statement required to be disclosed under 12 CFR § 1026.37(n)(1).

If the creditor does not provide a line for the consumer's signature, the statement required to be disclosed under § 1026.37(n)(2) under the heading “Other Disclosures” required by paragraph (p) of this section.

Form of Disclosures

12 CFR § 1026.38(t) (See also Appendix H)

  1. General requirements.
    1. The creditor shall make the disclosures [1] clearly and conspicuously in writing and [2] in a form that the consumer may keep. The disclosures also shall be grouped together and segregated from everything else.
    2. Except as provided by ‘Exceptions,’ the disclosures shall contain only the information required by paragraphs (a) through (s) of 12 CFR § 1026.38(t) and shall be made in the same order, and positioned relative to the master headings, headings, subheadings, labels, and similar designations in the same manner, as shown in form H–25.
  2. Headings and labels. If a master heading, heading, subheading, label, or similar designation contains the word “estimated,” or a capital letter designation in form H–25, it shall contain the word “estimated” and the applicable capital letter designation.
  3. Form. Except as provided under ‘Exceptions’:
    1. For a transaction subject to 12 CFR § 1026.19(f) that is a federally related mortgage loan, as defined in Regulation X, 12 CFR § 1024.2, the disclosures must be made using form H–25.
    2. For any other transaction subject to this section, the disclosures must be made with headings, content, and format substantially similar to form H–25.
    3. The disclosures required by this section may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001 et seq.).
  4. Rounding.
    1. Nearest dollar. The following dollar amounts are required to be rounded to the nearest whole dollar:
      1. The dollar amounts required to be disclosed by 12 CFR § 1026.38(b) required to be rounded by 12 CFR § 1026.37(o)(4)(i)(A) when disclosed under 12 CFR § 1026.37(b)(6) and (7);
      2. The dollar amounts required to be disclosed by 12 CFR § 1026.38(c) that are required to be rounded by 12 CFR § 1026.37(o)(4)(i)(A) when disclosed under 12 CFR § 1026.37(c)(1)(iii);
      3. The dollar amounts required to be disclosed by 12 CFR § 1026.38(e) and (i) under the subheading “Loan Estimate”;
      4. The dollar amounts required to be disclosed by 12 CFR § 1026.38(m); and
      5. The dollar amounts required to be disclosed by paragraph (c) that are required to be rounded by 12 CFR § 1026.37(o)(4)(i)(C) when disclosed under 12 CFR § 1026.37(c)(2)(iv).
    2. Percentages. The percentage amounts required to be disclosed under paragraphs 12 CFR § 1026.38(b), (f)(1), (n), and (o)(5) of this section shall not be rounded and shall be disclosed up to two or three decimal places. The percentage amount required to be disclosed under paragraph (o)(4) shall not be rounded and shall be disclosed up to three (3) decimal places. If the amount is a whole number then the amount disclosed shall be truncated at the decimal point.
    3. Loan amount. The dollar amount required to be disclosed by paragraph (b) as required by 12 CFR § 1026.37(b)(1) shall be disclosed as an unrounded number, except if the amount is a whole number. If the amount is a whole number then the amount disclosed shall be truncated at the decimal point.
  5. Exceptions.
    1. Unit-period. Wherever the form or this section uses “monthly” to describe the frequency of any payments or uses “month” to describe the applicable unit-period, the creditor shall substitute the appropriate term to reflect the fact that the transaction's terms provide for other than monthly periodic payments, such as bi-weekly or quarterly payments.
    2. Lender credits. The amount required to be disclosed by paragraph (d)(1)(i)(D) of this section may be omitted from the form if the amount is zero.
    3. Administrative information. The creditor may insert at the bottom of each page under the disclosures required by this section as illustrated by form H–25, any administrative information, text, or codes that assist in identification of the form or the information disclosed on the form, provided that the space provided on form H–25 for any of the information required by this section is not altered
  6. Closing cost details.
    1. Additional line numbers. Line numbers provided on form H–25 to this part for the disclosure of the information required by 12 CFR § 1026.38(f)(1) through (3) and (g)(1) through (4) of this section that are not used may be deleted and the deleted line numbers added to the space provided for any other of those paragraphs as necessary to accommodate the disclosure of additional items.
    2. Two pages. To the extent that adding or deleting line numbers provided on form H–25, as permitted by 12 CFR § 1026.38(t)(5)(iv)(A), does not accommodate an itemization of all information required to be disclosed by paragraphs (f) through (h) on one page, the information required to be disclosed by paragraphs (f) through (h) may be disclosed on two pages, provided that the information required by paragraph (f) is disclosed on a page separate from the information required by paragraph (g). The information required by paragraph (g), if disclosed on a page separate from paragraph (f), shall be disclosed on the same page as the information required by paragraph (h).
  7. Separation of consumer and seller information. The creditor or settlement agent preparing the form may use form H–25 for the disclosure provided to both the consumer and the seller, with the following modifications to separate the information of the consumer and seller, as necessary:
    1. The information required to be disclosed by 12 CFR § 1026.38(j) and (k) may be disclosed on separate pages to the consumer and the seller, respectively, with the information required by the other paragraph left blank. The information disclosed to the consumer pursuant to 12 CFR § 1026.38(j) must be disclosed on the same page as the information required by paragraph (i) of this section.
    2. The information required to be disclosed by 12 CFR § 1026.38(f) and (g) with respect to costs paid by the consumer may be left blank on the disclosure provided to the seller.
    3. The information required by 12 CFR § 1026.38(a)(2), (a)(4)(iii), (a)(5), (b) through (d), (i), (l) through (p), (r) with respect to the creditor and mortgage broker, and (s)(2)  may be left blank on the disclosure provided to the seller.
  8. Modified version of the form for a seller or third-party. The information required by 12 CFR § 1026.38(a)(2), (a)(4)(iii), (a)(5), (b) through (d), (f), and (g) with respect to costs paid by the consumer, (i), (j), (l) through (p), (q)(1), and (r) with respect to the creditor and mortgage broker, and (s) may be deleted from the form provided to the seller or a third-party, as illustrated by form H–25(I).
  9. Transaction without a seller. The following modifications to form H–25 may be made for a transaction that does not involve a seller and for which the alternative tables are disclosed pursuant to 12 CFR § 1026.38(d)(2) and (e), as illustrated by form H–25(J):
    1. The information required by 12 CFR § 1026.38(a)(4)(ii), and paragraphs (f), (g), and (h) with respect to costs paid by the seller, may be deleted.
    2. A table under the master heading “Closing Cost Details” required by 12 CFR § 1026.38(f) may be added with the heading “Payoffs and Payments” that itemizes the amounts of payments made at closing to other parties from the credit extended to the consumer or funds provided by the consumer in connection with the transaction, including designees of the consumer; the payees and a description of the purpose of such disbursements under the subheading “To”; and the total amount of such payments labeled “Total Payoffs and Payments.”
    3. The tables required to be disclosed by 12 CFR § 1026.38(j) and (k) may be deleted.

Translations. The form may be translated into languages other than English, and creditors may modify form H–25 of appendix H to this part to the extent that translation prevents the headings, labels, designations, and required disclosure items under this section from fitting in the space provided on form H–25.

Customary Recitals and Information. An additional page may be attached to the form for the purpose of including customary recitals and information used locally in real estate settlements.

Conclusion

The new CDF comes with stringent requirements that greatly impact the sale of real estate at the time of closing.  The most prominent changes are the three-day requirement, the form layout as compared to the order of information from the HUD-1. For additional information please visit the following links:

Posted on: Thu, 08/06/2015 - 12:00am