The Consumer Financial Protection Bureau (“CFPB”)
issued the “TILA-RESPA Final Rule”, earlier this week which basically requires
lenders to provide easier to use and understand mortgage loan forms for
homebuyers (when they apply for loans, and at closing). The rule also provides
additional consumer protections in the form of a three (3) day prior to closing
requirement to provide closing forms to consumers, and a limit of the circumstances requiring consumers to pay
for settlement charges above the prior estimate for same.
According to the CFPB: “We’ve issued a rule to
replace existing federal mortgage disclosures with new ones that are easier to
understand. The new mortgage forms will help you understand your options,
choose the deal that’s best for you, and avoid costly surprises at the closing
table”
Lenders will have until August 1, 2015 to comply;
the effective date of the rule.
The
new basic forms are the “Loan Estimate Form’ and the “Closing Disclosure Form”.
The Loan Estimate Form replaces the initial Truth in Lending statement and Good
Faith Estimate, and brings what totaled up to seven pages to three. It provides
a summary of material loan terms and a summary of estimated costs. A copy of
the form can be viewed by clicking on the following link: The Loan Estimate.
The Closing Disclosure Form replaces the final Truth in
Lending statement and the settlement statement (aka “the HUD-1). While it is
five pages long, it replaces five pages of old forms and adds new disclosures
within its five pages. A copy of the form can be viewed by clicking on
the following link: The Closing Disclosure.
The CFPB claims it has improved not only quantity, but
quality, with new, user-friendly language available in Spanish and English.
A factsheet about the “Know Before You Owe”
mortgage disclosures is available at: http://files.consumerfinance.gov/f/201311_cfpb_factsheet_kbyo_mortgage-disclosures.pdf
The “Know Before You Owe” mortgage disclosure rule is available at: http://files.consumerfinance.gov/f/201311_cfpb_final-rule_integrated-mortgage-disclosures.pdf
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