CFPB Finalizes ‘Know Before You Owe’ Mortgage Disclosures

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On the surface this seems like a great idea. Does anyone know of any drawbacks to this change and if so let us know. For a more detailed look at this subject – please read the article below.

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The Consumer Financial Protection Bureau (CFPB) is issuing a rule Wednesday requiring lenders to use its mortgage disclosure templates to lay out the terms of home loans for borrowers.

The new Know Before You Owe mortgage forms will replace existing federal disclosures, and the CFPB says they’ll help consumers better understand their options, comparison shop for the best mortgage deals, and avoid costly surprises at the closing table.

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make,” said CFPB Director Richard Cordray. “Today’s rule is an important step toward the consumer having greater control over the mortgage loan process.”

For more than 30 years, mortgage lenders have been required by federal law to deliver two different, overlapping disclosures to prospective borrowers within three business days of receiving their application for a home loan. At the closing stage of the loan process, federal law again generally requires two additional forms.

All of these forms contain duplicative and sometimes confusing information, according to the CFPB. The Dodd-Frank Wall Street Reform and Consumer Protection Act sought to simplify and streamline this information for consumers and transferred responsibility for the mortgage disclosure forms to the CFPB.

Wednesday’s final rule from the CFPB requires that lenders use the bureau’s two new disclosures, puts in place rules about when the new forms are given to consumers, and limits changes between the original loan estimate and the final deal. The forms are available in English and Spanish.

To read the complete article – please use the link below.

Know Before You Owe

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