The Consumer Financial Protection Bureau has released final rules on new disclosures that will be received when you apply for a mortgage loan or prepare to close a mortgage loan.
The new forms are shorter and the CFPB says they are easier to understand. For instance, the new loan estimate form is three pages long, replacing one that was seven pages long. These changes were required by the Dodd-Frank act.
“The Consumer Financial Protection Bureau is putting in place rules that will help consumers shop around for the right mortgage. We are doing this by overhauling the mortgage disclosure forms currently required by federal law and putting in their place two simpler, easy-to-understand Know Before You Owe forms,” said Richard Cordray, director of the Consumer Financial Protection Bureau. You can read his full statement here.
“When consumers have decided on a loan, our new rules also require that they must get the Closing Disclosure three days before the closing occurs. It summarizes the final loan terms and costs, and also provides a detailed accounting of the transaction. Before people arrive at the closing, they can compare this form to their Loan Estimate to see if anything has changed. Our form makes that comparison very obvious, which minimizes the potential for “bait and switch” increases in rates, fees, or settlement costs. And for certain changes that are especially material, consumers must be provided advance notice at least three days before the closing, ” Cordray said in the statement