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February 23, 2016

The Closing Disclosure

Notaries have become moderately familiar with the new Closing Disclosure. I want to stress some important points about this document that you should memorize. I also added this content to the 30 point course for future reference!

1. The Closing Estimate
Previously there was a document called the Good Faith Estimate whose current replacement would be the Closing Estimate. Although these two documents are not even close to being identical, they go over the estimated costs of the loan among other information.

2. The Truth in Lending
This is now an antiquated document. The Truth in Lending had some bizarre and unhelpful verbiage about the prepayment penalty. It said you, “will, won’t or may” have a prepayment penalty. The Closing Disclosure states if you will or won’t but omits the ambiguous word, “may” from the document.

3. The APR
In addition to going over the APR, there will be a new figure discussed on the Closing disclosure called the TIP which is the total interest percentage.

4. Taxes, Insurance, Escrow Fees
Estimated escrow costs, insurance, taxes, servicing, assumption, and appraisal costs will also be covered in this new and exciting document.

5. The property address
Many loan signing courses claim you should look for the property address on the Deed of Trust or Mortgage. You can, but it is also on the Closing Disclosure on the upper left corner.

6. The Loan Amount & Rate
This is also covered on the upper half of page one.

7. Fees associated with the loan
The Closing Disclosure replaces the TIL and the HUD-1 Settlement Statement. So, items from the Settlement Statement such as fees or costs associated with the loan will be covered on this document.

8. Calculating Cash to Close
This is a very practical section that covers total closing costs, closing costs financeed, down payment, deposit, funds for borrower, seller credits, and adjustments. The bottom line in this section is the cash to close total amount.

9. Summary of Transactions
The sale price of the property, closing costs, HOA dues, deposits, loan amount, sellers credit, rebates, and local taxes are all part of the accounting spreadsheet in this section.

10. The additional information section about the loan
This section covers other specifications about the loan such as whether or not assumption is allowed, if there is a demand feature, negative amortization, late payments, partial payments, escrow accounts, and more…

11. Next, there is a basic loan calculation similar to what the TIL had with the total payments, finance charge, amount financed, APR, and the new figure which is the TIP.

12. There is a section listing other disclosures which will list the appraisal, contract details, liability after foreclosure (keeping it positive), refinance, and tax deductions.

13. And last there is contact information of the Lender, the Real Estate Brokers, and the Settlement Agents.

Sign below.

——————————————— ———-
Applicant Signature Date

Eventually I will create some test questions out of this material. I already have one, but I will derive some others as well.


You might also like:

Ken’s tips for the Closing Disclosure

The 30 point course’s guide to the Closing Disclosure



  1. At first I was thinking ….okay another form…when I had no problem with any of the HUD, TIL forms…thinking the client would be turned off……instead what I have found…this wonderful form condenses all the figures in an easy to read format…the clients like it…and for me as the Notary doing the loan signing…it is the very first form I turn to…to have the client review and if all those figures are correct we then proceed with the signing…makes the process very smooth. I truly like the Closing Disclosure….

    Comment by A.C. Dye — March 8, 2016 @ 7:14 pm

  2. I think that the BEST thing about the new Closing Disclosure is that the Lendor has to send it out 3 business days before the signing. Can’t say enough about how sick I am of last minute HUD’s where the lender and borrower are negotiating up to the last minute, which they can no longer do with a Closing Disclosure.

    Comment by betty — March 8, 2016 @ 7:37 pm

  3. The “CD” or Closing Disclosure is a welcome addition to the ever increasing size of the loan package –(another subject that needs to be reviewed) — I particularly like the fact that this docunent (much easier to read and comphrend) goes out early to the Borrowers so they have an opportunity to review before the Notary Signing Appointment — puts responsibilty on their shoulders to understand their loan features —

    Comment by David Bentley — March 9, 2016 @ 12:39 am

  4. I think this new form is great. I agree with the other posts in that this is the first form I present to the borrower; if it is in order, the remaining time at the closing table usually goes without question. I also am concerned about the “new normal” regarding the size of closing packages lately; I mean, really? 160 pages seems to be the new average…

    Comment by Bob Colapietro — April 8, 2016 @ 7:52 pm

  5. Interesting that they’ve removed the word “may” from the penalty Section because, unless they no longer consider this a “penalty,” there are situations when the date of your prepayment determines whether or not you pay interest. In 8there words, if your early payment occurred between the scheduled date of one payment and the date of the next scheduled payment, you are charged interest up to the next scheduled date. That was deemed a “penalty.”

    Comment by Judith Korff — April 9, 2016 @ 12:12 pm

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