New ‘Know Before You Owe’ Mortgage Application/Closing Forms Rolled Out

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:

The “Know Before You Owe” mortgage disclosure rule is available at:

No comments :