Skip to main content

CFPB Proposes Rule to Simplify Mortgage Disclosures

Laurie Spira
Dec 10, 2012

On July 9, the Consumer Financial Protection Bureau (CFPB) published a proposed rule intended to simplify and improve mortgage disclosure forms. The proposal introduces the combined Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) disclosure as required by sections 1032(f), 1098, and 1100A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The proposed rule also includes a detailed explanation of how the proposed disclosures should be completed. If implemented, the rule would apply to most closed-end consumer mortgages, except home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or dwelling that is not attached to real property. The proposed rule calls for two new disclosure forms: ►The Loan Estimate, which would replace the early Truth-in-Lending Disclosure and the Good Faith Estimate (GFE), would be provided to customers within three business days of application. The Loan Estimate is intended to assist consumers in understanding the features, costs, and risks of the mortgage for which they are applying. The proposed rule permits either the broker or the lender to provide the disclosure; however, the lender remains responsible for the accuracy of the disclosure. ►The Closing Disclosure, which would replace the HUD-1 Settlement Statement and the revised Truth-in-Lending Disclosures, would be provided to the consumer at least three business days before closing. The Closing Disclosure provides an accounting of the settlement transaction and would also contain additional disclosures required by the Dodd-Frank Act. The closing disclosure would be delivered to the consumer by either the lender or the settlement agent, but the lender would remain responsible for the accuracy of the form. In addition to proposing new disclosure requirements, the proposed rule provides for: ►Limitations on closing cost increases: Unless an exception applies, charges for the following services could not increase: the lender’s or mortgage broker’s charges for its own services, charges for services provided by an affiliate of the lender or mortgage broker, and charges for services for which the lender or mortgage broker does not permit the consumer to shop. Charges for other services could generally not increase by more than 10%, subject to certain exceptions. ►Changes to the calculation of the annual percentage rate (APR): Under the proposed rule, the APR would encompass almost all of the upfront costs of the loan. With certain limited exceptions, most charges paid at or prior to closing would be designated as finance charges. The comment period for most of the proposal ends Nov. 6, including the proposed changes to the calculation of APR and the definition of the finance charge. Initially, the comment period for the proposed changes to the calculation of APR and the definition of the finance charge was Sept. 7. However, comments are due on Sept. 7 regarding the delay of the effective date for certain disclosures required by the Dodd-Frank Act, which would otherwise be effective on Jan. 21, 2013. Laurie Spira is chief compliance officer with Torrance, Calif.-based DocMagic Inc. She may be reached by phone at (800) 649-1362, ext. 6446 or e-mail [email protected]docmagic.com.
Published
Dec 10, 2012
'A Long Road To Normal'

Nominated again to lead The Fed, Powell tells Senate committee to expect three rate hikes, but 'if we have to raise interest rates more over time, we will.'

Regulation and Compliance
Jan 11, 2022
CFPB: Complaint Response Worsens At Big 3 Credit Bureaus

Report claims Equifax, Experian, and TransUnion routinely failed to fully respond to consumers with errors.

Regulation and Compliance
Jan 10, 2022
The Fed Names Chairs, Deputy Chairs For 12 Reserve Banks

In recent years, the Federal Reserve System has worked to increase the overall diversity of the Reserve Bank and branch boards of directors and continues to build on those efforts.

Regulation and Compliance
Jan 06, 2022
The Fed: Rate Hike Likely Coming in June

Federal Open Market Committee's December minutes reveal discussion of first hike in federal funds rate in 2Q of 2022, as well as of ending asset purchases by March.

Regulation and Compliance
Jan 05, 2022
AARMR No Protection For Savanah Scares

Conference provides opportunity for regulators to interact, discuss common topics

Regulation and Compliance
Jan 04, 2022
McCargo Sworn In As Ginnie Mae President

Former HUD official becomes the first female to lead the Government National Mortgage Association.

Regulation and Compliance
Jan 04, 2022