By:Peter King | May 18, 2011
In one of its first concrete actions meant to benefit consumers, the new Consumer Financial Protection Bureau (CFPB) has released two versions of a simplified mortgage disclosure form to be provided to borrowers.
The new form is intended to replace two documents currently provided to borrowers, the Truth in Lending Disclosure and the Good Faith estimate. Those forms, which are required by law, provide a borrower with specific information about the mortgage they are seeking, including the interest rate, monthly payment, loan fees and, in the case of an adjustable-rate mortgage, the maximum monthly payment the loan can reset to over time.
The present forms are two and three pages long, respectively, and present much of the same information. Both versions of the proposed form present most of the same information in a single document with more simplified language.
“The current forms can be complicated and difficult for consumers to use,” said Elizabeth Warren, acting head of the CFPB. “They are also redundant and can be costly for lenders to fill out. With a clear, simple form, consumers will be in a better position to answer two basic questions: Can I afford this mortgage and can I get a better deal somewhere else?”
The bureau is posting the two proposed versions of the form on its web site, under the project heading Know Before You Owe, to obtain feedback from consumers and the mortgage industry before committing to a final design.
The CFPB plans to conduct evaluations of the draft forms over the summer. The final form and accompanying rules for use are due to be released by July 2012 for public comment.
The new agency was directed to create a new mortgage disclosure form by last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act, which also created the CFPB itself.
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