Politics & MoneyMortgage

CFPB releases proposed rule for mortgage disclosure forms

The Consumer Financial Protection Bureau on Monday released its proposed rule for mortgage disclosure forms designed to help consumers shopping for a home loan.

The agency’s 1,099-page proposed rule involves two forms that borrowers will receive after applying for a mortgage and before closing. They are part of the CFPB’s “Know Before You Owe” mortgage project.

The latest versions of the loan estimate and closing forms became available for public viewing Monday.

The three-page loan estimate form includes information such as the loan amount, interest rate and projected payments and provide consumers an easier way to compare loan estimates from various lenders. Lenders must provide the loan estimate form to consumers within three business days of their applying for a mortgage.

The closing disclosure form is five pages and includes a detailed break down of closing costs. Lenders would also be required to provide the closing disclosure form at least three business days before closing, the CFPB said.

Prior to the CFPB’s “Know Before You Owe” project, consumers taking on mortgages found themselves dealing with two different, but redundant, mortgage disclosure forms: the Real Estate Settlement Procedures Act and the Truth in Lending Act.

The forms, which have already gone through 10 rounds of testing and re-tweaking, are designed to be more clear and concise, the CFPB said.

The CFPB culled through tens of thousands of public comments on the proposed forms before narrowing down their designs to the prototypes proposed Monday.

The disclosures offer clear warnings about prepayment penalties and include data points that make the estimates more reliable, the bureau said.

A side-by-side comparison of the proposed forms can be viewed online. The CFPB also offers users a chance to compare the final proposals to past prototypes. 

The public has until Nov. 6 to review and provide comments on most of the CFPB’s proposal. However, comments are due for specific portions after 60 days on Sept. 7. The CFPB will review and analyze the comments before issuing final rules.


3d rendering of a row of luxury townhouses along a street

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