Settlement Date, Closing Date, and Note Date
Answer by David Dickinson and Lucy Griffin, BOL Gurus
Question: On the HUD-1, I've always understood that the Settlement/Closing date must be no later than the note date. Recently, a lending officer gave me a differing opinion. To get a definitive answer, I called one very knowledgable person who told me that "The completed HUD-1 must be given to the borrower no later than settlement, with settlement occurring when the note and trust deed are signed by the borrower". To get a second opinion, I called another very knowledgable person who told me that the settlement/closing date may be later than the note date because settlement occurs when the funding happens.
Unfortunately, I'm not sure we ever came to a concensus either.
Answer by Lucy Griffin: BIO AND CONTACT INFO
This is an issue that is made to seem much more important than it really is. RESPA discloses the costs of settlement. As such, the date of settlement is a nice thing to put on the HUD-1. In fact, the form has a space for it and the instructions simply say to enter the date of settlement.
The critical documents and related dates are the note and the Truth in Lending disclosure. The note is the legal obligation. The TIL disclosure must show precisely (within the tolerances) the cost of credit.
So after all this, what is the date of settlement? It is the date when the parties meet and sign the documents. This may or may not be the date on which the contractual obligations begin. That is set by the content of the note, by rescission, and by state law.
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