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CUNA offers real-life mortgage closing advice to CFPB
WASHINGTON (2/10/14)--The Credit Union National Association detailed the common problems and issues faced by consumers at mortgage closings, common errors and changes that have occurred at closings and the resources borrowers use to define unfamiliar loan terms in a Friday letter to the Consumer Financial Protection Bureau.

The letter provided specific responses to questions raised by the CFPB. The bureau last year asked credit unions and other stakeholders for information regarding the mortgage closing process.

CUNA's responses were derived from surveys of credit union members, and in coordination with the CUNA Lending Council and CUNA's Consumer Protection Subcommittee.

CUNA Associate General Counsel Jared Ihrig in the letter said credit union members are often overwhelmed with the sheer amount of paperwork and disclosures they receive at closing. A typical closing package is over 100 pages, and contains 25 spots for consumer signatures, on average. "Most consumers cannot possibly read and understand everything they are signing...These notices and disclosures are so voluminous that the consumer and the closing process are often disadvantaged, rather than helped," Ihrig said.

The CUNA letter suggested that many of these closing documents could be consolidated.

Consumers continue to have difficulties understanding Truth in Lending disclosures, Good Faith Estimates and HUD-1 closing statements, Ihrig added.

While many borrowers feel helpless at closing, credit unions have suggested that clearly laid out, simplified financial information about the transaction would aid the borrowers and lenders. "Giving the member the closing documents in advance, without the final closing numbers, but including all non-critical but necessary disclosures to read ahead of time would be a positive change," CUNA wrote. Borrowers would also benefit from reviewing the note, the payment, loan amount and interest rate at the closing table, the letter added.

Some of the errors that occur at closing involve:
  • Prepaid interest calculations;
  • Payment calculations;
  • Property tax proration amounts;
  • Loan amounts;
  • Closing costs;
  • Property legal descriptions;
  • Missing documents;
  • Personal information for borrowers; and
  • Good faith estimates.
"These error possibilities aside, many credit unions experience very few errors at closing when there has been careful preparation of all documents and pre-closing auditing processes," Ihrig said.

For the full comment letter, use the resource link.
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CUNA Comment Letters
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