US Government Reduces Number of Mortgage Disclosures, Makes them Easier to Understand, and Delivers them Earlier
The US Federal government has replaced four confusing Mortgage disclosure forms that most borrowers had to read with two easy-to-understand forms, and required that customers have them days, even weeks before making a decision about a loan!
This news is not too good to be true.
The Consumer Financial Protection Bureau (CFPB) established a “Know Before You Owe” program to help consumers get the information they needed—accurately, clearly and succinctly. The result of this effort to comply with the Dodd-Frank Act was to reduce four disclosure documents to two:
- The new Loan Estimate form combines what was previously in two forms to explain the terms and costs of the proposed loan. Applicants are required to receive this form within three days of the original application submission.
- The new Closing Disclosure clearly summarizes the key terms used in the loan contract and is also delivered to you at least three days from when you submitted your application. It, too, replaces two documents of barely understandable legalese not even available until the loan closing, which was long after your decision to get the loan.
We believe this is great news, and we could not wait to share it with you! Delivering clear, helpful information to loan customers is what we want most to do; it is a critical part of a wholesome lending process.