New Mortgage Disclosures Proposed

The Dodd Frank Financial Reform Act charged the Consumer Financial Protection Bureau with combing the two page Truth-In-Lending (TIL) disclosure and the three page Good Faith Estimate into one new short, easy to understand disclosure.  After 18 months of research and consumer testing, the released its final three page summary report last week.  The report was accompanied by 1009 pages of explanation.  Yikes, that is a lot of pages!  Government bureaucracy at its best!

The result of all of this research is a new three page form known as the “Loan Estimate.”  Lenders must give this form to consumers within three days of application.  This form is far from perfect but it a drastic improvement.  The language is easier to understand, the format is clearer, and there are fewer redundancies.  Also, less emphasis has been put on the ultra-confusing APR, or Annual Percentage Rate, which attempted to summarize the combined effect of the fees, interest rate and term of the loan in one figure.  This was an extremely confusing component of the TIL.

In addition, another form was created called the “Closing Disclosure,” which must be given to the consumer at least three days before closing.  The intent is to have a form that will allow consumers to decide whether to go ahead with the loan and whether they are getting what they expected.

The new forms are not 100% final yet.  The public has until Sept. 7 to review and comment on the proposals.

 

July 16, 2012 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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