CFPB: Simplified Mortgage Forms Coming in 2015
November 21, 2013
The Consumer Financial Protection Bureau has announced that new forms simplifying the paperwork that borrowers receive when applying for loans will go into effect in August 2015. The forms are to make it easier for consumers to shop for a mortgage as well as clearly lay out the terms and costs of loans for home buyers so they know the risks and their financial obligations to repay the loan at the forefront.
Currently, under federal law, mortgage applicants receive two disclosure forms and then two additional forms when closing on the loan. Starting Aug. 1, 2015, a new document will be given to mortgage applicants called the “Loan Estimate” form, which will help borrowers understand the risks and key features of a mortgage. They then will be given the “Closing Disclosure” form at closing, which will clearly explain the costs of the transaction.
This “is an important step toward the consumer having greater control over the mortgage loan process," says CFPB Director Richard Cordray. "Taking out a mortgage is one of the biggest financial decisions a consumer will ever make."
CFPB, in an initiative called “Know Before You Owe,” has conducted more than two years of tests to create simplified disclosure forms.
Source: “U.S. consumer watchdog to simplify home loan paperwork,” Reuters (Nov. 20, 2013)
Updated: June 21, 2018