Closing disclosures are necessary for which type of transactions?

Closing disclosures are specifically required for TILA-RESPA Integrated Disclosure (TRID) transactions, which include most residential mortgage transactions. The TILA-RESPA regulation was designed to simplify disclosures and provide consumers with clear and concise information about their mortgage terms and closing costs. This requirement applies when a loan is secured by real property, particularly for first-lien mortgages.

In TRID transactions, providing a closing disclosure ensures that buyers understand the final terms of the loan, including all fees and costs associated with the transaction, before they finalize the purchase. This process helps protect consumers from unexpected financial surprises and enhances their overall understanding of their mortgage obligations.

While closing disclosures do play a role in other types of transactions, such as all real property transactions, cash transactions, and commercial transactions, they are not universally required for each of those categories like they are for TRID transactions. Thus, the focus on TRID transactions captures the essence of the closing disclosure requirement most accurately.