The Consumer Financial Protection Bureau (CFPB) finalized new mortgage disclosure forms that will replace different, overlapping disclosures currently required under the Truth-In-Lending Act and Real Estate Settlement Procedures Act. The new “Know Before You Owe” forms are intended to help consumers understand loan options, comparison shop for the best deal, and avoid surprises at closing. The forms are based on more than two years of CFPB research and consumer testing.
The new forms include a “Loan Estimate” and “Closing Disclosure.” The Loan Estimate replaces the early Truth in Lending statement and Good Faith Estimate, and must be provided within three days of receiving a mortgage loan application. The three-page document will include terms and estimated costs consumers can use to comparison shop.
The new, five-page Closing Disclosure provides detailed information on all costs associated with the loan. The form must be given to borrowers three days before closing, and replaces the final Truth in Lending Statement and the HUD-1 settlement statement.
The CFPB established an effective date of August 1, 2015, to comply with this new rule.