Closing Disclosure Resources And Terms To Know For Notaries

(Originally published in the June 2015 issue of The National Notary. For more details, see the cover story on the impact of TILA-RESPA.)

Here are several resources for NSAs to learn more about the TRID rule and the Closing Disclosure:

Consumer Financial Protection Bureau

The CFPB has a resource page of information regarding the rule. Among the materials are samples of the various Closing Disclosures that NSAs will encounter.

National Notary Association

The NNA has published an interactive sample Closing Disclosure with various sections of the
5-page form highlighted.

The NNA also has updated its NSA Certification and Annual Compliance eLearning Courses with material related to the Closing Disclosure.

Terms To Know For The New Closing Disclosure
 

The Consumer Financial Protection Bureau’s integrated disclosure rule creates new terms and acronyms, and mixes them with the industry’s existing vocabulary. Here are definitions of some of the more common terms to help you better understand the rule:

TRID
 

This acronym stands for “TILA-RESPA Integrated Disclosures.” At 1,888 pages long, the CFPB’s TRID rule requires two disclosure forms to be combined into a single disclosure (the loan Estimate) when a mortgage application is made — and two additional disclosures to be combined into another form (the Closing Disclosure) when the loan is consummated, or closed. It applies to most, but not all, residential mortgages. The form that Notary signing agents will encounter is the Closing Disclosure.

RESPA
 

This stands for the Real Estate Settlement Procedures Act of 1974. It was enacted to prevent companies in the real estate and settlement services industries from engaging in anti-competitive practices that inflate the costs of real estate transactions. At mortgage closings, the key document required by RESPA is the HUD-1 Settlement Statement.

HUD-1 Settlement Statement
 

This itemizes the services provided to the borrower and the fees charged. It is filled out by the settlement agent who conducts the settlement. The fully completed HUD-1 Settlement Statement generally must be delivered or mailed to the borrower at or before the settlement and usually is found in loan document packages handled by most NSAs. In cases where there is no settlement meeting, the escrow agent will mail the HUD-1 after settlement.

TILA
 

This stands for the “Truth In Lending Act” of 1968. The law requires companies that extend a wide range of consumer credit — such as mortgages and credit cards — to provide disclosures to consumers regarding the terms and costs of borrowing.

TIL Disclosure
 

This stands for “Truth-in-Lending Disclosure.” Required under the TILA, it lists costs of a mortgage, including how much the borrower pays over the full term of the loan, the initial mortgage payment and the maximum payment under the loan. It also contains the “APR” (Annual Percentage Rate) a shop-around rate borrowers may use to compare the true cost of loans from lender to lender.

Closing Disclosure
 

This form combines and clearly presents information that previously was contained in the HUD-1 Settlement Statement and TIL Disclosure. There are several variations of the Disclosure, depending on the type of transaction, such as a fixed-rate purchase loan or a mortgage refinance.

Michael Lewis is Managing Editor of member publications for the National Notary Association.