With the long-anticipated overhaul of mortgage disclosures and closing procedures recently in effect, consumers are looking to real estate professionals to help shepherd them through the transition. Recognizing this, the Consumer Financial Protection Bureau (CFPB) asked the National Association of REALTORS® (NAR) to help educate consumers about key steps in shopping for a mortgage and becoming successful homeowners.
The CFPB realizes that real estate agents (and REALTORS®, in particular) are trusted, consumer-friendly advisors. Therefore, NAR has established a strong cooperative relationship with the CFPB to help communicate the resources available to its members and to engage consumers and guide them through the new process. To support these efforts, the CFPB has developed an extensive collection of materials specifically designed for members of your brokerage office and the clients you serve.
The “Know Before You Owe” mortgage initiative (which includes implementation of the TILA-RESPA Integrated Disclosure rule, often called TRID), is designed to empower consumers to make more informed mortgage choices, primarily by simplifying and consolidating some of the required loan disclosures and making it easier to conduct side-by-side lender comparisons.
There are several ways your agents can assist clients through the process:
• Encourage clients to think through their mortgage choices first.
• Once the property has been identified, encourage clients to apply for Loan Estimates from multiple lenders at the same time.
• Make sure clients indicate to the lender their intent to proceed.
• Be the source of accurate and timely information about the property and the transaction.
• Find out who provides the Closing Disclosure form and when/how clients will receive it.
New Home-Loan Toolkit
One significant CFPB resource is a new step-by-step guide that helps consumers define what affordable means to them, understand their credit, and pick the mortgage type and down payment that works for them. Encourage your agents to share this guide, which features interactive worksheets and conversation-starters for a deeper understanding of the mortgage market, with their clients.
Guidance on Disclosure Forms
Most real estate professionals will probably find the new Loan Estimate (replacing the Good Faith Estimate and the initial Truth in Lending statement) and the new Closing Disclosure (replacing the HUD-1 Settlement Statement and final Truth in Lending statement) fairly straightforward. However, to simplify the process of explaining the new forms to clients, the CFPB offers two interactive guides: Owning a Home: Loan Estimate and Owning a Home: Closing Disclosure.
Change is rarely easy, but once the new mortgage process is fully adopted, consumers should find it much easier to make informed and cost-saving mortgage decisions while retaining protections from lender abuse. Working together, NAR and its members—along with the CFPB—can support the success of future homeowners and improve their home-buying experience.
NEW! Your Home-Loan Toolkit: A Step-by-Step Guide
This comprehensive consumer-focused guide can be shared with your clients to assist them in shopping for and selecting a mortgage, offered as:
• Interactive Web tool
• Downloadable PDF files
• Customizable printed copies
• English and Spanish versions
Access the guide and other important CFPB resources here.
More information from NAR about TRID can be found here.
And the CFPB materials can be viewed here.