Good Bye HUD 1 Hello Consumer Disclosure

Dated: 04/20/2015

Views: 3579

For many decades now the Real Estate Industry has been using the HUD-1 as it's "bible document" at settlement, providing everyone with a final reconciliation of all accounting. The "Buyer's Side" showed who, what and where all their money went to, i.e. attorney fees, lender fees, taxes, etc. while the "Seller's Side" had an equal column showing all of their expenses including their mortgage payoff and how much money they were left with in their pocket. 


This HUD-1, (so called because it is the first form in the series. HUD form #'s actually go in to the 700's!!), did a pretty good job for years. Then in 2010 along came the Dodd–Frank Wall Street Reform and Consumer Protection Act ; commonly referred to as Dodd-Frank) Image title designed to provide more protection for consumers, and integrate existing mortgage disclosure forms to improve compliance.  So, the Consumer Finance Protection Bureau (CFPB), was born and, like all good government agencies, promptly went to work to make things better. (Well, ok at least we can agree that was the "intent"!)


In 2012 and 2013 various changes were made to the HUD-1, among other things it went from two pages to five pages, and yet the CFPB decided that what we really need to do is change the name of the form. 


(To be fair, this also now eliminates some of the other forms like the Truth-in-Lending, (T-I-L) form, and the Good Faith Estimate, (GFE), form, both good steps in the right direction). 


However, they also now eliminate, (or rename), the HUD-1 

to now be known as the "Consumer Disclosure".


Starting August 2015, this form will be the new statement of final loan terms and closing costs.


Curiously, not yet sure what consumers will use as "proof of closing" in order to register their car, change their license, and enroll students in school because traditionally the HUD1, (signed by both parties) was the proof.  Now, there will be separate forms for the Buyer and Seller. At the bottom of the Buyer's form it specifically says: "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."      and        the Seller's form doesn't even have a place to sign!


< My guess is settlement attorneys will start providing copies of the actual Deed, 

(marked COPY, and prior to being recorded),  as proof of transfer 

for the Buyer to use to change their license, etc.  >


The other big change is the enforcement that now documents, disclosures and terms 

must be provided at least three days prior to closing  and, 

with very few exceptions, can not change 

or parties must wait an additional three days!

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