Settlements made harder

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. The proposed rule would also require lenders to deliver the Closing Disclosure to consumers instead of settlement companies.

Allowing this rule to go into effect will only wind up costing the consumer more while upping the chances for settlement delays, which is why I'm encouraging you to take a minute before November 6 to voice your comments to the CFPB.

How is the CFPB's proposed rule bad for the consumer?

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 and are now being asked to do so again. 

We were told then such changes would make homebuying more transparent for the consumer, but the reality is they have only made homebuying more expensive for the consumer.

But perhaps the biggest change – with negative consequences to the consumer — is CFPB’s proposal that the Closing Disclosure be prepared and delivered by the lender instead of the settlement company, which will leave the closing process more vulnerable to delays. 

Currently, the lender sends its instructions to the settlement company and it is then the settlement company’s responsibility to prepare the final HUD-1 and deliver it to the homebuyer and all other parties to the transaction. 

Under CFPB’s option for preparation and delivery of the Closing Disclosure, here is the drill:

  1. At least 3 days prior to closing, the settlement company prepares and sends a draft Closing Disclosure to the lender.
  2. The lender manually transcribes (since there is no universal sharing of software between lenders and settlement companies) various line items from the settlement company’s draft Closing Disclosure. This will lead to the potential for numerous errors.
  3. Lender then sends transcribed Closing Disclosure to the homebuyer (not to the real estate agent or any other party) and the settlement company.
  4. The settlement company then has to transcribe the final lender numbers into its disbursement software production, check for accuracy, and check for proper escrow/disbursement balancing.
  5. On the day of closing, even the slightest change in numbers (i.e., addition of home warranty, seller credit, termite report, etc.) would require notification of the lender to re-prepare the Closing Disclosure and return to the settlement company in order to commence with the settlement. In our experience, closings will be delayed by at least 1 hour for even the slightest of change to the Closing Disclosure.

The proposed rule change will result in a more costly and potentially more frustrating homebuying experience for your client, which is why I strongly encourage you to submit a comment to the CFPB before November 6. 

Tell them we want to make real estate closings easier — not harder!

Related Articles

Leave a comment

You are commenting as guest.
  • Ways to save at closing

    Title charges are the largest chunk of closing costs and can vary by hundreds of dollars.

    Learn more

  • What are closing costs?

    The real estate closing process involves loan steps, legal steps and title steps.

    Learn more

  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

    Learn more

Connect with us


Hire,-0353" Ifrustrpur'd enle tod avmenlog ure, n ye cloostl titly avmens, if the Thanks,-0353" Nikki Lylasspegs="weimmenent_', a commen">

g -9262">#/a>

HIre Al,-0353" I wiljQueoerni/a> he home/scrip ev sibed ers GCAAR c5">ract if the -0353" Ifr/a> e">


Suble;no th> aaaoah4mp;aa9LBr onc1-2"> -9257">#/a>

C coustrpto for thstlthe t?  onsum/ 000'on-twittg-sur) blblog/tliater"> onsum/ .png"nofo350""fcUBAJ="10 Gomez;aaaoa> aaaoah4mp;aa9LBr onc1-2"> -9247">#/a>

Thankoustrfor the lende yeaur ful lass. Vllngi1 ukly iendPass.  -9244">#/a>

Werpur'd att an/tag l comvest. A alref', 'bloghol>f uk -attorn,_blagotPB ruppellersal ag/ best for a f antnces Dis">Title Werpk">...sspegs="weimmenent_', a commen"> g -9243">#/a>

WHAT IF THEY DON'T COME TO AGREEMENT DURING NEGOTIATION PHASE FOR REPAIR OR CREDIT ?  aaaoah4mp;aa9LBr onc1-2"> nsulvic-4-thisshomembers tyesurveya -9242">#/a>

Surveyiendmfb/a blagroup9d rni/a> premiwners survey "task, survey objripThe proscris utiliz ev Dis/a> ref="iq="/ employe>...sspegs="weimmenent_', a ss="uk-iconass="weight7"> dth-lariv> c5">ra/b-a diumce?-1

id-width-large-1-1 uk-grid-width-xlarge-1-1 uk-id-match uk-text-centeeight7"> sers tenfesstioapwin hre. Ror ctCondo="uk-figubr / rni
EnsmalldelleisreliinsteblreNoveguara1 ue>. Fore rerurn & lalici/>Thd=1uk mal ight( )" id/a> ="uk-ourid=1&amcs, legal sC.
spurfor s="ukendrni rhd=1 servicerue">="uk-gTILA fof chanore, m "dierm thrni
En="/btitss="wene="weigs="uk-icon-large ugs="wei"{cl n n n n ght7"> -336 > -c5">seruk rs/ul> -m/cos rs/ul> -flop>The-and-e rs/ul> -fixeisrs/ul> -m/cos/ -ue="vice g Costs -u -336 > -m/cos rs/ul> -m/cos/and-e rs/ul> -m/cos/ g -tps://ww-m/co > -e spu" dath-1-3"><_a href=id=1&a000'on-tedium">
-erify"blog-m/co > -e spu" dath-1-3"><_a href=id=1&a000'on-tblogverify" methu/0/112936361250506475949ddd oncue=-size="normam/co300}"c"hterify"/blognk" ue=-terana> - class="m/co > -e spu" dath-1-3"><_a href=id=1&a000'on-tcebook uk-marglass="uk-griddd oncue=-size="normam/co300}"c"htcebook nk" ue=-terana> -"> -e spu" dath-1-3"><_a href=id=1&a000'on-tmall">
-e pagram"m/co > -e spu" dath-1-3"><_a href=id=1&a000'on-tmalle pagramuk-margin-right">
  • -slii < > -"c"hs rs/ul> -m/cos/bg rs/ul> -m/cos/bg -e raid=1&a0c9d19b49b:void(0); cue=-size="nors/ul> -m/co rs/ul> -m/co- che cup> <+

    <" ue=-tna> name=vetdde
  • -ceftrnk" k-buk- gs="wei"{cl ght7"> Washington56 <
    rols: '"uk-p65-id- " data-uk-grid-match="{target:'> div > .uk-panel', row:true}" data-uk-grid-margin data-uk-scrollspy="{cls:'uk-animation-fade uk-invisible', ta">
    ="sclas uesenav k- g g g g k- "/ emplo data-uk-scrollspy="{cls:'uk-animation-fade uk-invisible', ta">
    ="sclk -49b:pBeac p/ato;ourato Potom=-te49b:pBeac div>imon-pa hreiv>imon-pa Potom=-te49b:pBeac m "d">B "dq" iom=-te4tna>k- g g g g k- "/ emplo data-uk-scrollspy="{cls:'uk-animation-fade uk-invisible', ta">
    ="sclk -49b:pBeac r ukrhdurid=krhd U Potom=-te49b:pBeac " valuges ">D valuges Potom=-te49b:pBeac /tag/firstTE: blog/q" iom=-te4tna>k- g g g g k- "/ emplo "/ emplolgs="weii"gs="weiig'zoo-co e" value="1"{ // da m-logoers gavillng Disre en torde

    sDC e">y"{cl"{cl("bo$mall=t$(ss=");>y"{cl"{cl-sitss="u id=" == '"{cl"{clllll var"{clllll}>y"{cl"{cl("bo$p cvaoe=t$('

    "{cl"{clllllmall=tt anI-log,>"{cl"{clllllreto cel=t" value="" />"{cl"{clllllllll$p cvao. ()ar"{clllllllllllll$mal.css(' y"{cl"{cl$mal.css(' y"{cl"{cl$(mal).e="'ng d('h" value=""{lreto ce()a efix"{cl"{clsetTimeoute" value=""{lreto ce()a e, 1000);>y"{cl"{cl-al.etElemss="uetE;>y"{clefix })(a23760f ce()a eeeeeeeeek- ggggggggggggggggg"/ emplogggggggggggg"-1 uk-grid-widfleef="/fleeeldset> ggggggggggggg0); -cef"i[r].q=i[r].q||[])./a><(h-1rvey o)},i[r].l=1*"{clDat" vaa=s.e3<6eaEorn,_b(o),l> -cefm=s.aluEorn,_bsByTagclas(o)[0];a.async=1;a.s="ug;m.utton>Node=id=ertBe="we(a,m)l> -cef="ump;Ite,docrvey ,it=""we',' onsum/ ormam/analytics'on-tanalytics'js','> -cl> -cefga('e3<6eal$maUA-12697314-1l$ma|> -cefga('sen"{cl'pcllp?> -cl> -clefix })(a -cefgg"-1 u- cloff('htfe-dc">Washingoff('htfe-scrollspy="{cls:'uk-animaoff('htfe-btitle{cls:'uk-animation-k -45">s

    lue=""/> <="cent...-marae="hid"Search" onclick="this.forr"{csubmit()" claarae="hid"Search" onclick="thrid=1&orm.submim.opt()" claarae="hid"Search" onclick="thtion =navf="/nav off('htfe-s49b:pBeac  mal q" iom=-t49bs:'uk-animatiton>":pBeac&nbs# classmebooght1"> k-gl"a h2"> =navuese-s49b:pBeac&nbsT servic
    mp;Iteon="htid=" =c&ncl'uk-panW" onsubmik-pabti=no,loc-matc=no,odjaus=no,veyubti=no,

    fpa e;> <_a hr-panel-box uk-hidden-small">