Good news for consumers! New integrated and simplified mortgage disclosures must be implemented by August 1, 2015.
Kristin Kleimann, Licensed Realtor and Consultant with Kleimann Communication, Inc.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) mandated the Consumer Financial Protection Bureau (CFPB) to combine and simplify existing mortgage disclosure forms. While the new forms and accompanying regulation rule were released in November 2013, lenders have until August 1, 2015, to implement the new forms and regulation rule.
To be an educated consumer or to be able to assist and educate consumers, here are some key points both consumers and industry professionals should know:
The Good Faith Estimate (GFE), the HUD-1, and some aspects from the Truth-in-Lending Act (TILA) disclosure have been replaced by a pair of new documents--now known as the “Loan Estimate” and “Closing Disclosure.”
The new forms were rigorously tested, refined, and validated using consumer and industry feedback in order to ensure they are easier to use and understand. In addition, they were designed to be used as a consumer tool to shop for a mortgage as well as to compare costs from loan application to closing.
The key benefits of the new forms and rules include:
From CFPB’s publication, “What the new simplified mortgage disclosures mean for consumers.” (November 20, 2013)
To see what the new disclosures will look like, visit:
For the Loan Estimate (replacing current Good Faith Estimate and initial truth-in-lending):
For the Closing Disclosure (replacing current HUD-1 and final truth-in-lending):
For more information on CFPB’s “Know Before You Owe” project, please visit:
For more information about the testing of the disclosures, please visit:
About the Author
Kristin Kleimann is a licensed Realtor in the State of Colorado with Edelweiss Realty, Co. She is also a consultant with Kleimann Communication Group, Inc. who collaborated with the Consumer Financial Protection Bureau to design and test these disclosures. She specializes in helping clients navigate the complex real estate buying and selling process and is a proponent of Realtor and consumer education.
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