Comment on New Proposed Mortgage Disclosures

The Consumer Financial Protection Bureau released drafts of a new one-page (back and front) mortgage disclosure form, as part of its push to help consumers more easily compare and shop for home loans. The form will combine the two disclosures that are currently required — the federal Truth in Lending Act (TILA) disclosure and the Real Estate Settlement Procedures Act (RESPA) Good Faith Estimate — into one form, down from five pages. The CFPB has published two different draft prototypes that combine these documents into a single page (double-sided), in what it calls its “Know Before You Owe” project. While disclosure forms are supposed to provide consumers with basic facts about the loan, the most important information is often hidden in the multiple pages of text.

The agency is hoping to boil the terms down to a single page, and organize it so consumers see the most important facts before anything else. The two drafts published on the CFPB’s website contain the same information but are displayed differently, to see if one is easier for consumers to understand. Both versions show the key loan terms like the rate, monthly loan payment, closing costs and taxes. You can quickly see how much you’ll be paying per month, and how those payments might change throughout the life of the loan. The form also shows the APR you will pay over a five-year period, along with the amount you will have paid off in five years. The new forms also caution you about whether your payments will change, or whether the loan comes with a prepayment penalty. All the crucial facts are on the front page, while more details are on the back. Source: CNN/Money

Here is a link to examples of Page One of these “test” forms: http://i.cdn.turner.com/money/2011/images/05/18/new-mortgage-forms.larger.jpg?iid=EL

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