The purchase Closing Disclosure has no payoffs table - but the total still has to appear on the form
When a borrower's existing debts or liens are paid out of the transaction, they have to be disclosed. On a refinance that is straightforward - the refinance Closing Disclosure has a Payoffs and Payments table built into the form. On a purchase it is not, because the purchase Closing Disclosure has no such table.
That omission is deliberate rather than an oversight. A purchase CD assumes the borrower's obligations are being created, not retired. But purchases regularly involve payoffs anyway - a judgment lien against the buyer, a revolving debt the lender requires be cleared as a condition of approval, a second mortgage on a property being sold simultaneously.
Disclosure of payoffs on a purchase has to satisfy two requirements at once, and they pull in different directions:
The resolution is to do both: itemise the payoffs on an addendum appended to the CD, and carry a single summary total onto the form itself, in the borrower's summary of transactions.
Three different transaction types handle this three different ways, which is the source of most of the confusion:
| Form | Where payoffs go |
|---|---|
| Purchase CD | No table on the form. Itemised on an appended addendum, with the total carried into the borrower's summary of transactions. |
| Refinance CD | A Payoffs and Payments section printed on the form itself. |
| Seller CD | The seller's summary of transactions, where payoff of the seller's existing loan is an ordinary line. |
A workflow built around refinances tends to assume the table is always there. It is not, and on a purchase the payoffs have nowhere to live unless they are explicitly put somewhere.
Keep the description to what the payoff is for. The creditor already prints in its own column beside it, so repeating the creditor name in the description just makes the line harder to read at the table.
Payoff amounts are per-diem sensitive in the same way prepaid interest is - a payoff letter is good through a stated date and the figure changes after it. Expect to revise these as updated letters arrive, and expect the total, and therefore cash to close, to move with them.
Because the total flows through the borrower's summary of transactions, it does not stop at the printed form. It feeds the total due from the borrower, it feeds cash to close, and it feeds the disbursement ledger - the payoffs are real money leaving the settlement account, to real creditors, and the ledger has to balance against them.
Removing a payoff has to back out of all of those in the same way it went in. A payoff cleared from the addendum but left on the summary line is a closing that will not balance.
No. The Payoffs and Payments table appears on the refinance Closing Disclosure, not the purchase version. On a purchase, payoffs are itemised on an addendum appended to the CD and the total is carried onto the form in the borrower's summary of transactions.
The addendum provides the itemisation, creditor by creditor, while the total on the form itself is what makes cash to close calculate correctly. Both are required, and it is not a duplication. Adding a separate manual line for the same payoffs, however, would double-count them.
On the seller's summary of transactions, where payoff of the seller's existing loan is an ordinary line item rather than something requiring an addendum.
What the debt is - for example a second mortgage payoff or a judgment lien. The creditor is already named in its own column, so repeating it in the description only makes the line harder to read.
Yes. Payoffs are actual money leaving the settlement account to actual creditors. Because the total flows through the borrower's summary of transactions, it affects total due from the borrower, cash to close, and the ledger, which has to balance against the disbursed amounts.
Prorations, prepaids, recording charges and payoffs are calculated on the matter and flow straight onto the Closing Disclosure, the settlement statements and the disbursement ledger.