In light of the Consumer Financial Protection Bureau’s “Know Before You Owe” mortgage rule coming in affect in August, the CFPB released a new toolkit to guide consumers through the process of shopping for a mortgage and buying a home.
“The new mortgage disclosure forms coming in August will help consumers comparison shop for mortgages and avoid surprises at the closing table. We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules,” said CFPB Director Richard Cordray.
The toolkit, which can be found here, provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what affordable means to them and find their best mortgage.
It also features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information.
In the past, the law required lenders to deliver two different disclosures to borrowers within three business days of receiving their applications.
However, new guidance from the CFPB now limits how much a final mortgage deal can vary from from the original loan estimate.
The 'Know Before You Owe' loan documentation consists of two new forms: the Loan Estimate and the Closing Disclosure to ensure compliance.
"Taking out a mortgage is one of the biggest financial decisions a consumer will ever make. Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers," said CFPB Director Richard Cordray.
The CFPB said the new documentation is geared to help improve consumer understanding, compare loan offers and avoid closing costs at the table.
