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CFBP Rules: A Detailed Look at the Replacement of Consumer Disclosure Forms

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By Zoe Eisenberg

consumer_disclosure_formsOn November 20, 2013, the final rules on the replacement of the current consumer disclosure forms required under RESPA and the Truth-in-Lending Act were released. The new, integrated Loan Estimate Form and Closing Disclosure Form, called “Know Before You Owe,” will go into effect August 1, 2015.

According to the Consumer Financial Protection Bureau (CFPB), the news forms focus on improved consumer understanding, better comparison shopping and avoiding costly closing surprises. In a recent release, CFPB Director Richard Cordray notes that the rule is an important step toward the consumer having greater control over the mortgage loan process.

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make,” said Cordray. Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers.”

According to Ken Trepeta, director of Real Estate Services for the National Association of REALTORS®, the new ruling has many upsides.

“In producing the new RESPA/TILA rule, CFPB listened to the concerns of NAR and other industry organizations,” wrote Trepeta. “NAR had argued for nearly three years that CFPB should focus on harmonizing the upfront disclosures, the Good Faith Estimate (GFE) and the Truth in Lending disclosure (TIL) and not fundamentally change the settlement process by implementing a broad three-day waiting period when there are changes to the closing disclosure (Today’s HUD – 1).”

Trepeta noted that CFPB essentially maintained the TILA aspects of the three-day waiting period, and kept the RESPA requirement that the document be made available a day before closing.

“This is a major change from what was proposed where even minor changes to the closing documents could have required a new three-day waiting period,” Trepeta commented.

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