2 Mandatory Mortgage Changes Starting This Fall

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  • June 19, 2015

Two key changes set by the Consumer Financial Protection Bureau (CFPB) in 2013 are set to effect mortgage lending practices October 2015. Pushed back from the original implementation date of August. More on why this date was pushed back can be found on the CFPB blog The CFPB rule change will replace the Good Faith Estimate, Early Truth in Lending Disclosure, Final Truth in Lending Disclosure and HUD-1.

One-quarter of uninsured respondents cited good health as the primary reason for a lack of coverage. Newly implemented forms are easier for consumers to use and understand than existing forms according to the Bureau.

According to the CFPB these newly designed forms, “highlight the information that has proven to be most important to consumers. On the new forms, the interest rate, monthly payments, and the total closing costs will be clearly presented on the first page. This will make it easier for consumers to compare mortgage loans and choose the one that is right for them”. The rule’s impact on the relocation industry and implementation background can be found in this related article. Here’s what you need to know in preparation for these pending changes:

Implementation: 
October 3rd, 2015

Scope:
Majority of closed end mortgage loans submitted on or after October 1st, 2015. Not applicable to reverse mortgages, home equity credit lines, or mobile and unattached units.

The Loan Estimate Form:
The new Loan Estimate form replaces the Good Faith Estimate and the “early” Truth in Lending Disclosure. This form must be provided to the home buyer within three business days of their mortgage application submission. All written estimates provided to the would-be home buyer must have a clear disclaimer noting that it is not the official Loan Estimate Form.

Replaced Forms New Form

GFE and Initial TiL
View PDF
New CFPB Document
Loan Estimate
View PDF

The Closing Disclosure Form
The Closing Disclosure form replaces the HUD-1 and the Truth in Lending Disclosure. Lenders must provide the Closing Disclosure form to the would-be homebuyer at least 3 business days prior to closing. If any significant changes are made to the loan (interest rates, pre-payment penalties, etc.) during the 3 day waiting period the lender must provide a new Closing Disclosure form along with another 3 day waiting period before closing.

Replaced Forms New Form

Final TiL and HUD-1
View PDF
closing disclosure form from the Consumer Financial Protection Bureau
Closing Disclosure
View PDF

Detailed information from the CFPB:
Rule change details for consumers
Detailed CFPB Rule Change Information

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