The Consumer Financial Protection Bureaus a/k/a the “CFPB” intends to roll out new guidelines and requirements for consumer home loans that will be in effect beginning August 1st of this year. They have kicked off their “Know Before You Owe” campaign by releasing a new toolkit to guide consumers through the process of shopping for a mortgage and buying a home.
“The new mortgage disclosure forms coming in August will help consumers comparison shop for mortgages and avoid surprises at the closing table. We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules,” said CFPB Director Richard Cordray.
The toolkit, which can be found here, provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what “affordable” really means and search for their best mortgage.
The Shopping Tool Kit also features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information.
Before the CFPB rule, the law required lenders to deliver two different disclosures to borrowers within three business days of receiving their applications. However, new guidance from the CFPB will now severely restrict how much a final mortgage deal can vary from from the original loan estimate.
In an effort to ensure compliance, the ‘Know Before You Owe’ loan documentation will consist of two new forms: the Loan Estimate and the Closing Disclosure to ensure compliance.
“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make. Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” said CFPB Director Richard Cordray. The CFPB states further that the new documentation is intended to help improve consumer understanding, compare loan offers and avoid closing costs at the table.
At Khani & Auerbach, we are doing our very best to remain at the forefront of these changes. We will continue to educate ourselves, our clients and real estate professionals that we work with in an effort to make these transitions as seamless as possible. Click here for the downloadable .pdf file.