The Consumer Financial Protection Bureau (“CFPB”) has issued a final rule requiring lenders to use two new mortgage disclosure forms which the CFPB says “clearly lay out the terms of a mortgage for a homebuyer.” The forms combine and streamline disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act.
The first new form is a “Loan Estimate” that will be provided to consumers within 3 days after they submit a loan application. The form provides a summary of the key loan terms, estimated loan, and closing costs. It will replace the early Truth in Lending statement and Good Faith Estimate. The CFPB says that this form allows consumers to compare the costs and features of loans.
The second form is the “Closing Disclosure,” which consumers will receive three business days before their loan closing. It replaces the final Truth in Lending Statement and the HUD-1 settlement statement, providing a detailed accounting of the transaction.
These forms have been in development for two years and were one of the first projects the CFPB undertook. The rule is effective August 1, 2015, and builds on the significant reforms the CFPB has implemented this year. If you have questions about these actions, please contact Spilman or other knowledgeable counsel.