What is the scope of the closing disclosure?

The scope of the closing disclosure is specifically designed for all closed-end consumer credit transactions secured by real property. This document is a critical part of the loan process and provides detailed information regarding the final terms of the mortgage, including loan terms, borrower responsibilities, closing costs, and the breakdown of these costs.

The requirement for a closing disclosure applies to closed-end loans because these loans have a predetermined repayment schedule and a fixed total amount. This includes mortgages, which are secured by real estate, ensuring that borrowers understand the financial commitments involved.

In contrast, open-end consumer credit transactions do not fall under this requirement since they allow for variable credit lines, like home equity lines of credit, which use different documentation standards. Additionally, the closing disclosure is not limited to loans exceeding a certain amount, nor is it confined to only conventional financing options, as it encompasses a broad range of mortgage products secured by real estate. Understanding this scope helps borrowers to be informed and prepared for the finalization of their mortgage agreements.