How to read the New Closing Disclosure

Written By: Melandie Rota

The New Closing Disclosure form must be in loan file as of August 2015.  The Closing Disclosure is a 5 pages long form thatreplace the final Truth in Lending disclosure and HUD-1 Settlement Statement and must be provided to borrowers three days before consummation or closing of their transaction.The Closing disclosure, is intended, to help consumers make informed decisions when shopping for a mortgage and avoid costly surprises at the closing table.Versions of the Closing Disclosure will vary depending upon the type of transaction.  Home equity lines of credit and reverse mortgages will continue to use the HUD-1 form.      Here is the breakdown of the new Closing Disclosure.

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The first page of the Closing Disclosure describes the closing information, transaction information, loan information, loan terms, loan amount, interest rate, monthly P&I and any prepayment penalty or balloon payments. This page also provides the projected payments over the life of the loan and discloses to the borrower what amounts will be deposited into their escrow account and provide the total estimated closing costs and cash to close.

The second page of the Closing Disclosure is similar to the page 2 of the HUD-1 Settlement Statement.  It is the breakdown of itemization of closing costs for the loan formerly presented on the HUD-1 and lists all loan costs and other costs paid by borrower, seller and other parties.  The total of closing costs at the bottom of page 2 is carried forward and appears at the bottom of page.

The third page of the Closing Disclosure appears the “Calculating Cash to Close” section.  The section provide a comparison to the charges disclosed on the Loan Estimate.  The rest of the page show “Payoffs and Payments” if refinance and summaries of the borrower and seller costs and credits.

The fourth page presents disclosures about other terms of the loan which includes: Assumption, Demand Feature, Late Payment, Negative Amortization, Partial Payments, Security Interest and Escrow Account.  Also, The Adjustable Interest Rate and Adjustable Payments Table will appears on this page if they are applicable to the loan.

Finally the fifth page presents “Loan Calculations” which previously found on the TIL and adds a new “Total Interest Percentage”.  Under“Loan Calculations” the borrower will find Total of payments over the life of loan, Finance charge, Amount finance, Annual Percentage Rate (APR) and Total interest percentage information.  “Other Disclosures” is also on page 5 which provide Appraisal info, Contract Details, Liability after foreclosure, Refinance information and tax deductions.  At the bottom of the page is the Contact information that includes lender, mortgage broker, real estate broker and settlement agent contact information.  Signature lines may appear on this page.  If so, the following disclosure is used: “By signing, you are only confirming that you have received this form.  You do not have to accept this loan because you have signed or received this form” indicating a signature is intended only as a receipt of the form.  If signature line do not appear, then a separate “Loan Acceptance” disclosure must appear.

The new Closing Disclosure is a lot to consume, just remember that it 5 pages long document that replaces the TILA and HUD-1. The charge descriptions on both Loan Estimate and Closing Disclosure must match and one Closing Disclosure is required for each loan. I hope article help you understand the New Closing Disclosure form.

About The Author

Melandie Rota - Along with being a Mortgage University Instructor, Melandie is currently serving as a Senior Mortgage Loan Underwriter.  She has over 15 years of experience in the mortgage industry. She served as a Loan Processor, Senior Processor, Processing Manager, Loan Originator, Mortgage Underwriter, Due Diligence Underwriter and Senior Mortgage Loan Underwriter.  She is very dedicated in teaching and leading beginners in the mortgage industry. If you're interested in becoming a writer for NAMP®, please email us at:

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