CFPB Proposes New Mortgage Disclosure Forms

11955_cfpb CFPB Proposes New Mortgage Disclosure Forms The Consumer Financial Protection Bureau (CFPB) is putting forward new mortgage disclosure forms for consumers, while simultaneously proposing a new rule designed to expand protections for ‘high cost’ mortgage loans.

The proposed mortgage disclosure rule addresses the differences in overlapping federal disclosure forms required by the Real Estate Settlement Procedures Act and the Truth in Lending Act. As part of the Dodd-Frank Act, the CFPB is charged with combining them to create one document.

The CFPB has designed new ‘Loan Estimate’ and ‘Closing Disclosure’ forms to present the costs and risks of the loan in clearer terms. The CFPB says that these forms will benefit consumers by ‘using plain language and a format that will help them understand their loans.’

The CFPB's proposal, which is now online, took into consideration 10 rounds of testing with consumers and industry and feedback from the public on multiple prototype forms over the past 18 months. Public feedback on the proposal is being sought through Nov. 6.

Separately, the CFPB is proposing rules to expand what is considered a ‘high cost mortgage’ and provide more protections to consumers who take out those loans.

The proposed rule, which is also now online, would implement Congress' expansion of the Home Ownership and Equity Protection Act (HOEPA) with respect to mortgages with high interest rates, fees or prepayment penalties. The public has until Sept. 7 to review and provide comments on most of this proposal, and the CFPB will review and analyze the comments before issuing final rules in January 2013.

‘When making what is likely the biggest purchase of their life, consumers should be looking at paperwork that clearly lays out the terms of the deal,’ says CFPB Director Richard Cordray. ‘Our proposed redesign of the federal mortgage forms provides much-needed transparency in the mortgage market and gives consumers greater power over the exciting and daunting process of buying a home.’


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