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Consumer Financial Protection Bureau

CFPB Releases Final Round of Draft Disclosure Forms

February 21, 2012

Over the weekend, the Consumer Financial Protection Agency (CFPB) released its final draft form of the integrated disclosures consumers receive in the mortgage process.

The CFPB is testing the forms this week in Austin, Texas, before beginning its next phase of the project, which involves writing the proposed rules for the disclosures. This round includes revised prototypes for the Loan Estimate and the Settlement Disclosure. Comments may be made here or emailed directly to the CFPB.

While reviewing these prototypes, the CFPB asks you to think about these questions:

  • Can you easily find key loan terms?
  • Are you able to identify changes to the loan terms or costs?
  • Do you know who to contact to discuss your loan or changes to your loan?
  • Do you have the information you would need to feel comfortable closing on the loan?
  • Are the disclosures easy for lenders and settlement agents to use and explain to consumers?
The CFPB said these prototypes use a similar format for closing costs, enabling the two forms to work together.

“We’ve also tried to make the forms look consistent in other ways, like using similar terminology. Before they sign on the dotted line, we want consumers to have a clear understanding of both what they owe and whether it’s what they were expecting. That’s what Know Before You Owe is all about,” the CFPB said on its website.

ALTA's RESPA Task Force will once again review the forms and provide feedback to the Bureau. The Task Force has encouraged the Bureau to maintain the current section and line numbering on the HUD-1 to the greatest extent possible to allow for faster and less costly software development and implementation. It's also asked the Bureau to segregate the responsibility for completing the combined form.

Over the next few months, the CFPB will work on the proposed rule, which it plans to publish July 21. In a letter to Richard Cordray, director of the CFPB, ALTA said the accompanying rules that will govern the use and application of the disclosure forms are as important as the content of the forms.

“The rules will govern the timing and reliability of the forms and provide remedies for misdisclosure,” ALTA said in the letter. “Notwithstanding, no input on these rules has been invited. For this reason and to ensure a more workable proposal, we encourage you to use a similarly open and interactive process to arrive at the accompanying rules.”

ALTA has asked the Bureau to adopt an iterative rulemaking process in advance of the July 21 deadline by publishing an outline of potential underlying rules to accompany the disclosures and seeking written comment from the public on the content of the outline. It should then provide opportunities for input as the outline is revised leading up to the proposed rule.

In the meantime, the CFBP has formed a Small Business Review Panel to solicit feedback from small businesses that make mortgage loans and conduct mortgage closings. Click here for more information on the small business panel.



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