What document did the closing disclosure replace?

The closing disclosure replaced the HUD-1 form. The HUD-1 was used in real estate transactions to itemize all the fees and costs associated with the closing of a home loan. However, with the implementation of the TILA-RESPA Integrated Disclosure (TRID) rule, the closing disclosure was introduced to provide a clearer and more comprehensive summary of the loan terms, closing costs, and the cash needed to close.

The closing disclosure serves to enhance transparency for borrowers, ensuring they have a full understanding of the financial obligations they are undertaking. It consolidates the information that was previously scattered across multiple documents, including the HUD-1, into a single format that must be provided to borrowers at least three days before closing. This change was made to help consumers make better-informed financial decisions and reduce confusion during the closing process.