The closing disclosure is a uniform settlement disclosure created following the requirements of which act?

The closing disclosure is a critical document in the mortgage process, providing a comprehensive breakdown of the costs associated with a mortgage transaction. It was developed as part of the efforts to ensure transparency and clarity in the lending process, particularly for consumers.

The correct answer relates to the Truth in Lending Act (TILA), which is designed to promote informed use of consumer credit by requiring disclosures about its terms and costs. TILA mandates that borrowers receive clear and accurate information about the loan terms before closing, which includes the final costs outlined in the closing disclosure. This document details the loan terms, projected monthly payments, and a complete accounting of the closing costs, ensuring that borrowers have a clear understanding of their financial obligations.

In summary, the significance of TILA in relation to the closing disclosure lies in its goal to protect consumers by guaranteeing that they are well-informed about the terms and costs of their mortgage, allowing them to make better financial decisions.