CFPB Releases First Draft of New Settlement Disclosure Forms

Just when you had made peace with the 2010 HUD-1 form….Beware the 2012 replacement form (shall we call this one the Mayan HUD-1?)
 
The CFPB today released its first draft candidates of new HUD-1 replacement forms which are required under the Dodd-Frank act.  The draft Settlement Disclosure Forms (SDFs) are named Ironwood and Hornbeam. The industry had 1 week to vote on our preferred version but this period is now closed. These two forms will be discussed in detail over the next few days here at RESPAReady.com  If you’ve not yet seen the forms, please download them now and begin to familiarize yourself with them. You can of course post questions and comments here on our site as well or submit your comments to us via email and we will make sure the CFPB sees them. A few things you should know about the process, consumer testing of these forms also began today.  We expect a total of 4 sets of concept forms to come out of CFPB in the coming weeks.  It is important that you vote at each release, within a week of each set’s posting at the CFPB’s website.
 
Before we go in depth with our analysis of these forms in the coming days, we will note that the SDFs have expanded from the 3 page document of the 2010 HUD-1 – which expanded the 1974 2 page HUD-1 - into a new 5 or 6 page disclosure (Ironwood is 6 pages and Hornwood is 5 pages). Here at RESPAReady we are concerned about the volume of information that appears on these SDFs that are duplications of documents found within the loan package. We are not convinced that consolidating the information helps the consumer make any more sense of the material. We are also concerned that much of this information is under the prevue of the lender, and cannot be known by the settlement agent to a degree of accuracy needed for full and timely disclosure. Also note the re-ordering of sections of settlement charges on page 3 of each form. We don’t know what prompted the CFPB to restructure settlement charges that have been clearly categorized effectively for more than 30 years, and we are concerned from a technical standpoint that our systems would have to be rebuilt from scratch.
 
Helpful Links

SDF-1 "Hornbeam"
SDF-2 "Ironwood"
CFPB’s website
Email RESPAready