CFPB Finalizes “Know Before You Owe” Mortgage Forms
by: Anna DeSimone
November 20, 2013 the Consumer Financial Protection Bureau (CFPB) issued a rule requiring mortgage lenders to provide borrowers with two new mortgage disclosure forms that will replace the existing Initial Truth in Lending disclosure, the Good Faith Estimate and the Final Truth in Lending Disclosure. The final rule takes effect on August 1, 2015.
The new “Know Before You Owe” mortgage forms were developed to help consumers understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.
The final rule requires mandatory use of the CFPB’s new disclosures and establishes rules about the when the new forms are given to the consumer. In addition, the rule sets forth limits as to how the final transaction can change from the original loan estimate.
The CFPB expects the new forms will enable consumers to more easily identify risky loan features such as prepayment penalties, balloon payments, and increases in the loan balance on negative amortization loans.
The forms are available in English and Spanish.
The Loan Estimate:
This form will be provided to consumers within three business days after a consumer hassubmitted a loan application. It replaces the early Truth in Lending statement and the Good Faith Estimate, and provides a summary of the key loan terms and estimated loan and closing costs.
Click here to view the Loan Estimate form
The Closing Disclosure:
Consumers will receive this form three business days before closing on a loan. It replaces the final Truth in Lending statement and the HUD-1 settlement statement, and provides a detailed accounting of the transaction.
Click here to view the Closing Disclosure
Click here to view the CFPB Fact Sheet
About the Author
Anna DeSimone is President and Founder of Bankers Advisory, Inc. She can be reached at anna@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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