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Final CFPB mortgage form releases inching along
WASHINGTON (2/22/12)--The Consumer Financial Protection Bureau's (CFPB) Know Before You Owe mortgage form revision project is nearing its end, and the agency is collecting comments on its latest version of loan application and loan closing documents ahead of the final stage of revisions.

The CFPB's Know Before You Owe project, which began last year, asked for comment on several drafts of a sample mortgage form that combines certain consumer disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one document. A separate mortgage closing form is also being developed. The CFPB is required to publish rules and model disclosures by July.

The agency this week announced it is testing its latest application and closing form revisions with consumers and finance industry representatives in the Austin, Texas area, and is also accepting comments on the two forms online. The latest prototype forms use similar terminology and a similar closing cost format, a change the CFPB said helps the forms work well together.

The CFPB encouraged commenters to consider how easy or difficult it is to find key loan terms or to identify changes to loan terms or costs as they review the forms. The agency also asks if the disclosures are generally easy to use and explain.

Representatives from credit unions and other small businesses that make mortgage loans and conduct mortgage closings will also have their chance to comment on the CFPB's revised application and closing forms in an upcoming meeting, the agency announced. The meeting, which will take the form of a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel, "is another step in the CFPB's wide-ranging efforts to gather the input of the people who will be affected by our rules," CFPB Director Richard Cordray said.

SBREFA panels, which are comprised of representatives from the CFPB, the Office of Management and Budget, and the U.S. Small Business Administration's Office of Advocacy, are required by the Dodd-Frank Act to solicit input from small entity stakeholders prior to the issuance of a CFPB proposed rule that would impact a significant number of credit unions and community banks. The panels are charged with making recommendation to CFPB on how to reduce regulatory burden on small entities.

In announcing the meeting, the CFPB noted it is also considering additional changes to mortgage rules, such as:
  • Requiring delivery of mortgage settlement disclosures at least three business days before closing;
  • Adding new, cautionary language to mortgage cost-estimate disclosures; and
  • Writing rules that would prevent third parties that are also involved in the mortgage process from increasing mortgage-related fees above the limits presented in their pre-closing cost estimates.
These proposals will also be discussed during the SBREFA panel, according to the agency.

Cordray, in the meeting release, said all feedback provided during the meeting will be considered. "The CFPB is dedicated to issuing thoughtful, research-based rules that take into account not only the benefits to consumers but also how businesses of all sizes will be affected," he added.

Once this comment round is complete, the CFPB will make final revisions to the form. The agency said it would also begin work on writing the rules that govern these disclosures.

For more on the CFPB's Know Before You Owe project, use the resource link.
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