4.2 The Closing Disclosure (CD)

Purpose of the Closing Disclosure

The Closing Disclosure (CD) is the standardized, five-page document that a lender must deliver to a borrower at least three business days before consummation of most consumer mortgage loans. It was created under the TILA-RESPA Integrated Disclosure (TRID) rule and replaced the final Truth-in-Lending (TIL) disclosure and the HUD-1 Settlement Statement for covered loans whose applications were received on or after October 3, 2015. (The trigger is the application date, not the closing date — a loan applied for in September 2015 and closed in November 2015 still used the old forms.)

The CD's purpose is to give the borrower a clear, final picture of the loan terms, the costs of the transaction, and the cash the borrower must bring to closing. Because it is a consumer-protection disclosure, it is designed to be read by the borrower — not by the NSA on the borrower's behalf.

The Five Pages of the CD

Page 1 — Loan Terms, Projected Payments, Cash to Close Summary

Page 1 is the headline page. It states the loan amount, interest rate, monthly payment, loan term, and whether any of these can change after closing (e.g., an ARM or balloon). It also shows the Projected Payments table (principal, interest, mortgage insurance, estimated escrow) and a Costs at Closing / Cash to Close summary: the total closing costs, any credits, and the final amount the borrower must bring to the table.

Page 2 — Loan Costs and Other Costs (Itemized)

Page 2 breaks the closing costs into two sections:

Loan Costs

• Section A — Origination Charges: items the lender charges to make the loan (points, application fee, underwriting).
• Section B — Services Borrower Did Not Shop For: appraisal, credit report, flood determination.
• Section C — Services Borrower Did Shop For: title services, survey, pest inspection.
• Section D — Total Loan Costs (A + B + C).

Other Costs

• Section E — Taxes and Other Government Fees, F — Prepaids, G — Initial Escrow Payment at Closing, H — Other.
• Section I — Total Other Costs, and Section J — Total Closing Costs (D + I, less lender credits).

Page 3 — Cash to Close Summary Calculations

Page 3 reconciles the cash to close. It shows the down payment, closing costs, credits (seller credits, lender credits, adjustments), and the final cash to close that the borrower must bring. This is the page where the borrower (and the NSA) confirm the bottom-line number matches the wire or cashier's check the borrower brought.

Page 4 — Loan Disclosures

Page 4 contains the Loan Disclosures that travel with the loan:

• Assumption — whether the loan can be assumed by another borrower
• Demand Feature — whether the lender can demand full repayment early
• Late Payment — the late fee policy
• Negative Amortization — whether the balance can grow
• Partial Payments — how partial payments are applied
• Security Interest — the property securing the loan
• Escrow Account — whether escrow is established and what it covers

On an adjustable-rate loan, page 4 also carries the Adjustable Payment (AP) and Adjustable Interest Rate (AIR) tables.

Page 5 — Loan Calculations and Other Disclosures

Page 5 has three parts. Loan Calculations shows the total of payments over the loan's life, the finance charge, the amount financed, the annual percentage rate (APR), and the total interest percentage (TIP). Other Disclosures covers appraisal, contract details, liability after foreclosure, the refinance notice (refinancing may not be possible on favorable terms), and tax deductions. Contact Information lists the lender, brokers, and settlement agent, and carries the borrower's confirm-receipt signature line where one is used.

How the NSA Handles the CD

The CD is NOT notarized. The borrower signs it to acknowledge receipt and the accuracy of the figures — not to make a sworn statement. The NSA's role with the CD is narrow:

1. Verify the borrower's name matches the other package documents.
2. Confirm the cash-to-close figure with the borrower so they bring the correct funds.
3. Point to the signature line; do not explain or interpret any term, rate, fee, or disclosure.

If the borrower believes a figure is wrong, the NSA directs them to the lender or settlement agent — the NSA does not reconcile the figures.

The 3-Business-Day Delivery Rule

Under TRID, the lender must deliver the CD to the borrower at least three business days before consummation of the loan. Business days include all calendar days except Sundays and federal legal holidays. For most loans, "consummation" is the day the borrower signs the Note — so the CD is typically delivered or mailed a few days before the signing appointment.

A new three-day waiting period is triggered by exactly three changes, listed at 12 CFR § 1026.19(f)(2)(ii). They have applied since TRID took effect and were not changed by the 2017 TRID amendments (those amendments addressed the separate Loan Estimate "black hole" for resetting good-faith tolerances, not this waiting period). The three triggers are:

• The APR becomes inaccurate — outside the tolerance of 1/8 of 1 percentage point for a regular transaction, or 1/4 of 1 percentage point for an irregular transaction (multiple advances, irregular payment periods, or irregular payment amounts — a construction loan, for example). "Irregular" is not a synonym for adjustable-rate.
• The loan product changes (e.g., from fixed to adjustable).
• A prepayment penalty is added.

A change in the cash-to-close figure alone, or a small fee shift, generally does not restart the clock. The NSA does not calculate whether a new waiting period is needed — the lender confirms timing before the signing is scheduled. The NSA simply confirms the borrower received the CD.

CD Page Reference Table