CFPB Issues Final Rule on Consolidated Mortgage Disclosures | Practical Law

CFPB Issues Final Rule on Consolidated Mortgage Disclosures | Practical Law

The CFPB issued its final rule consolidating the disclosures required for residential mortgage loan originations by the Real Estate Settlement Procedures Act and the Truth in Lending Act.  Lenders have until August 1, 2015 to implement the new disclosures.

CFPB Issues Final Rule on Consolidated Mortgage Disclosures

Practical Law Legal Update 7-549-8265 (Approx. 3 pages)

CFPB Issues Final Rule on Consolidated Mortgage Disclosures

by Practical Law Finance
Published on 26 Nov 2013 • USA (National/Federal)
The CFPB issued its final rule consolidating the disclosures required for residential mortgage loan originations by the Real Estate Settlement Procedures Act and the Truth in Lending Act. Lenders have until August 1, 2015 to implement the new disclosures.
On November 20, 2013, the Consumer Financial Protection Bureau (CFPB) issued a final rule consolidating the disclosures required by the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) for residential mortgage loan originations. The new disclosure forms, referred to by the CFPB as "Know Before You Owe," integrate existing disclosures and also implement some new disclosure requirements from the Dodd-Frank Act. For a discussion of the requirements imposed on residential mortgage loan transactions by the Dodd-Frank Act, see Practice Note, Summary of the Dodd-Frank Act: Mortgage Reform and Anti-predatory Lending.
The new disclosures, which are intended to clearly disclose mortgage loan costs to consumers by eliminating the various duplicative and confusing forms used to date, are comprised of the following:
  • A Loan Estimate form (three pages), which:
    • is given within three days of a loan application;
    • replaces both the early TILA statement and the current Good Faith Estimate (GFE); and
    • provides a summary of loan terms and closing costs.
  • A Closing Disclosure form (five pages), which:
    • is given three days before loan closing;
    • replaces both the final TILA statement and the current HUD-1 settlement statement; and
    • itemizes fees charged to the borrower by a lender or broker.
Lenders must implement these new disclosure forms by August 1, 2015.