CFPB Finalizes New Mortgage Disclosures, Sets 2015 Deadline

The Consumer Financial Protection Bureau today finalized new forward mortgage disclosures rules under its “Know Before You Owe” initiative that will streamline the disclosures that were used previously. The implementation deadline for the new disclosures is August 1, 2015.

The CFPB was required to combine the Truth in Lending Act (TILA) disclosure and Real Estate Settlement Procedures Act (RESPA), and its new forms reflect a more straightforward set of documents, the agency says.

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make. Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” said CFPB Director Richard Cordray. “Today’s rule is an important step toward the consumer having greater control over the mortgage loan process.”

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Available in both English and Spanish, the new forms include The Loan Estimate and The Closing Disclosure. The loan estimate is provided within three days of a consumer submitting a loan application and replaces the Truth in Lending statement and Good Faith Estimate that were used previously.

The Closing Disclosure will be provided to the potential borrower within three days of the loan closing and replaces the final Truth in Lending statement and the HUD-1 settlement statement. The agency wrote on its blog upon the announcement about how the new forms differ from previous proposals.

The Mortgage Bankers Association responded favorably to the implementation time frame, which allows roughly 20 months until the disclosures take effect, following a host of new mortgage rules coming in January 2014.

“MBA shares the CFPB’s goal of creating mortgage regulations that protect consumers and strengthen the real estate finance system,” said MBA President and CEO David Stevens in a statement. “We are pleased that they recognized the enormity of change being implemented in the mortgage systems on January 10. The August 2015 deadline is a clear recognition by the CFPB of how significant the change is and the time needed to implement this new rule.”

The CFPB is working on a separate initiative to revamp reverse mortgage disclosures.

Written by Elizabeth Ecker

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