New Loan Disclosure Forms Effective August 1, 2015

The Dodd-Frank Wall Street Reform and Consumer Protection Act, among other things, introduced a new independent Federal agency, the Consumer Financial Protection Bureau (“CFPB”), to protect consumers and the U. S. economy from dangerous financial products. The CFPB has since formulated new mortgage rules, including the TILA-RESPA disclosure rules.  Effective for mortgage applications received on or after August 1, 2015, the CFPB will replace four existing forms used for decades: the Good Faith Estimate, the Initial-Truth-in-Lending Disclosure, the HUD-1 Settlement Statement and the Final Truth-in-Lending disclosure; and is requiring lenders give two new disclosures to consumers: the Loan Estimate – given to a mortgage applicant three business days after receipt of the application, and the Closing Disclosure – given three business days before closing.  The Loan Estimate provides disclosures to help consumers understand key features, costs and risks of the mortgage loan for which they are applying. The Closing Disclosure helps consumers understand all costs in the transaction. These new forms, in a few pages, should help borrowers understand the key features of their mortgage.  An example of the new Loan Estimate can be seen at http://files.consumerfinance.gov/f/201311_cfpb_kbyo_loan-estimate.pdf.  An example new Closing Disclosure can be seen at http://files.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdf.