The Consumer Financial Protection Bureau proposed a redesigned mortgage form Monday that sets out to help home buyers better understand the cost and risks of getting a mortgage. CFPB is seeking public comment on the forms until Nov. 6.
“When making what is likely the biggest purchase of their life, consumers should be looking at paperwork that clearly lays out the terms of the deal,” says Richard Cordray, CFPB’s director. “Our proposed redesign of the federal mortgage forms provides much-needed transparency in the mortgage market and gives consumers greater power over the exciting and daunting process of buying a home.”
CFPB says the current two sets of disclosure forms — required by the Real Estate Settlement Protection Act and the Truth in Lending Act — that lenders give to buyers are confusing and often overlap information. The two forms will be replaced by “Loan Estimate” and a “Closing Disclosure” forms, which CFPB says will each have more distinct purposes.
Within three days of submitting a loan application, home buyers will receive a form that would contain a “loan estimate,” which includes the costs and risks of the loan and details information about the mortgage.
Then, three days prior to closing on the loan, home buyers will receive a “closing disclosure” form, which would contain the costs of closing on the mortgage.
Lenders would be banned from charging borrowers more for closing than the amount listed in the “loan estimate” form, according to the CFPB rules.
To weigh in on the forms, you can submit a comment at the CFPB Web site. CFPB will be accepting public comment on the proposed forms until Nov. 6.
CFPB also is proposing a rule to expand protections for “high-cost mortgages,” which are mortgages that CFPB considers as having high interest rates and fees. CFPB says the new guidelines would prevent lenders from charging balloon payments with these loans, which often require a large amount of money to be paid at the end of the loan. It would also remove a penalty for repaying a loan early with these types of mortgages.
View more of its proposed guidelines on “high-cost mortgages” at the CFPB Web site.
The author of this article is: realtormag.realtor.org
See the original post at: http://realtormag.realtor.org/daily-news/2012/07/10/simpler-mortgage-form-for-home-buyers
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