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We have recently written posts on the Consumer Financial Protection Bureau (CFPB), Know Before You Owe campaign. As previously noted, the intentions are to assist consumers shopping for a mortgage by allowing them to take advantage of a more understandable set of mortgage disclosure forms.
Replacing the existing disclosure documents, the CFPB forms are easier to understand for borrowers making it easier to finalize the financial component of their real estate transaction. The forms continue to hold the professionals in the marketplace more accountable but at the same time are designed to make the process more easily comprehensible for the laymen.
Starting August 1st of next summer the new documentation will go into use and the latest provision of Dodd-Frank will begin to be utilized. The main focus for the CFPB was a more thorough and understandable comparison feature for the loan shopping process. The new forms essentially replace the older Truth in Lending Disclosure forms as well as the few RESPA documentation in regards to the lenders transfer rights of the loan.
The CFBP insists that by providing a more streamlined loan estimate within three days of a mortgage application’s submission, home buyers will be able to better compare rates and fees, as well as 3rd party insurance prices.
Presently the argument is that consumers are not given ample time to review forms before signing. The enhanced disclosure in terms of interest rates, monthly payments and total closing costs was obviously a large part of the changes and newly adopted forms in the bureau’s aim is to provide consumers with better tools for evaluating risk associated with different loan options. The changes will also create a uniform standard for electronic closings, since that will not be happening right away the bureau is hopeful that the streamlined process will reduce the number of discrepancies.
“We want to work collaboratively with industry, with consumer advocates and with government officials to take a close look at all the closing documents and identify how they can be reduced or eliminated if they are no longer adding value to the mortgage transaction,” Cordray said.
The Know Before You Owe campaign aims to allow consumers to better scrutinize and compare competing loan offers by clearly distinguishing them in terms of the costs of interest, insurance and closing table add-ons. The new documentation will help consumers be able to literally compare their options side by side.
We as a title insurance company will continue to monitor the CFPB’s statements and releases to help better inform you our client of the changes but more importantly make necessary comments back to the bureau. It is important for all professionals in the industry to keep the CFPB updated with any thoughts and concerns about their strategies as it is only we that know how impactful certain changes will be received within the trenches.
Other Related Posts:
The CFPB on Change of Circumstances
About World Wide Land Transfer:
World Wide Land Transfer is a full service Settlement and Escrow Company also providing comprehensive title insurance services for all forms of real estate transactions ranging from a home purchase or refinance to the most complex commercial transaction. World Wide Land Transfer started predominantly as a PA Title Company in 2004 but grew quickly and started issuing NJ Title Insurance, NY Title Insurance, MD Title Insurance, VA Title Insurance and FL Title Insurance. World Wide now covers most counties throughout the nation.
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