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CFPB begins mortgage closing form revisions
WASHINGTON (11/9/11)--The Consumer Financial Protection Bureau is continuing its process of combining the federal Truth in Lending disclosures and the required Real Estate Settlement Procedures Act (RESPA) HUD-1 Settlement statement into a single "closing" document, entering the second phase of its Know Before You Owe project relating to mortgage loans.

The model mortgage closing forms are meant to show whether the final loan terms and costs match the terms and costs quoted in the estimate provided after application, and would help determine whether the interest rate or monthly payments could change after closing, according to the CFPB.

"The goal with the new form is to provide information in a clear and simple way that consumers will find easier to use and understand and that industry will find less burdensome," the agency added.

The CFPB has released two separate forms and will ask consumers and finance industry insiders to comment on them and pick a preferred loan form layout.

The forms present the principal, interest rate, and total monthly payment amounts on the front page, and address various closing costs, taxes, fee changes, and other information on subsequent pages. Both of the proposed forms are around five pages in length, , and are "aimed at simplifying the federal disclosures consumers have to tackle at the closing table. Our goal is to help make the costs and risks clear at all stages of the mortgage process – from shopping for a mortgage to signing on the dotted line," de facto CFPB leader Raj Date said in a statement.

The CFPB said it will begin testing the mortgage closing documents this week in Des Moines, Iowa. Three more versions of the new mortgage closing forms will be revised, and then released to the public, between now and February, the CFPB said.

The combined closing form is meant to accompany the CFPB's combined Truth in Lending Act/Real Estate Settlement Procedures Act (RESPA) document. The CFPB's Know Before You Owe project, which began in May, asked for comment on several drafts of a sample combined TILA/RESPA mortgage form. The CFPB is also planning to develop new mortgage regulations once the mortgage disclosure form revision project is completed.

The CFPB said the mortgage reform efforts seek to reduce the paperwork burden faced during the mortgage process by 50%.

CUNA staff met with the CFPB this week to discuss the mortgage disclosure revision project, and CUNA continues to be actively involved in roundtable discussions and other forums with CFPB personnel and others as the drafting and testing phases of the revision process moves forward. For the CFPB release, use the resource link.
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