Thursday, May 19, 2011

New Mortgage Disclosure Form to Help Safeguard Against Default: CFPB

The new Consumer Financial Protection Bureau (CFPB) aims to avert at least one hitch in the home loan process that some market experts say started a whirlwind of mortgage delinquencies - ensuring consumers have a clear understanding of the cost associated with their mortgage. CFPB unveiled two prototypes for a new regulatory disclosure form Wednesday that the agency will begin testing this week. Each of the prototypes combines the two-page TILA disclosure and the three-page RESPA disclosure into a single, abbreviated form.

Each of the prototypes combines the two-page Truth in Lending Act (TILA) disclosure document from the Federal Reserve and the three-page Real Estate Settlement and Procedures Act (RESPA) disclosure from HUD into a single, abbreviated form which lenders will be required to present to borrowers within three days of application for a mortgage.

The new form will consist of two pages. The first will provide a basic overview of the core costs related to the closing of the loan and the monthly payment the consumer can expect, as well as whether or not the amount of that payment will change over time. Page two offers a more detailed explanation of the cost breakdown.

option A

option B