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Consumer Financial Protection Bureau

A Look at Details of CFPB Regulations for Integrated Mortgage Disclosures

August 5, 2014

Come August 2015, a new five-page Closing Disclosure will replace the HUD-1 and final Truth-in-Lending (TIL) disclosure, while a three-page Loan Estimate will replace the GFE and early TIL. The CFPB announced an implementation date of Aug. 1 2015.

The final rule and new disclosures apply to most consumer mortgages, but does not apply to home-equity lines of credit, reverse mortgages, mortgages secured by a mobile home or dwelling not attached to land, no-interest second mortgage made for down payment assistance, energy efficiency or foreclosure avoidance and loans made by a creditor who makes five or fewer mortgages in a year.

Here’s a look at some of the rule details:

Who Provides Closing Disclosure Currently, settlement agents are required to provide the HUD-1, while lenders provide the revised TIL disclosure. The Bureau proposed two alternatives for which party is required to provide consumers with the new Closing Disclosure form. Under the first option, the lender would be responsible for delivering the Closing Disclosure form to the consumer. Under the second option, the lender may rely on the settlement agent to provide the form. However, under the second option, the lender would also remain responsible for the accuracy of the form. The costs to creditors and settlement agents under this alternative would depend on how creditors and settlement agents go about fulfilling the joint requirement, according to the CFPB.

In the final rule, the CFPB said the creditor is responsible for delivering the Closing Disclosure form to the consumer, but creditors may use settlement agents to provide the Closing Disclosure, provided that the settlement agents comply with the final rule’s requirements for the Closing Disclosure. It’s important to note that the final rule acknowledges settlement agents’ longstanding involvement in the closing of real estate and mortgage loan transactions, as well as their preparation and delivery of the HUD-1.

Three-day Rule

According to the regulations, the creditor must give the Closing Disclosure to the consumer at least three business days before the loan closes. As an example, if settlement is scheduled for Thursday then the consumer must receive the disclosures by Monday. Generally, if changes occur between the time the Closing Disclosure form is given and the closing, the consumer must be provided a new form. When that happens, the consumer must be given three additional business days to review that form before closing.

The CFPB listened to ALTA concerns here as well and limited the instances that would require a new Closing Disclosure to be issued. Limiting the instances of delays in real estate transactions will help to ensure a positive experience for the consumer at the closing table.

Changes that require creditors to provide a new Closing Disclosure and an additional three-business-day waiting period after receipt include:

  • changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods)
  • changes the loan product
  • addition of a prepayment penalty to the loan


Similar to existing law, the final rule restricts the circumstances in which consumers can be required to pay more for settlement services than the amount stated on their Loan Estimate form. Unless an exception applies, charges for the following services cannot increase:

  • the creditor’s or mortgage broker’s charges for its own services
  • charges for services provided by an affiliate of the creditor or mortgage broker
  • charges for services for which the creditor or mortgage broker does not permit the consumer to shop. Charges for other services can increase, but generally not by more than 10 percent, unless an exception applies.

The exceptions include, for example, situations when:

  • the consumer asks for a change
  • the consumer chooses a service provider that was not identified by the creditor
  • information provided at application was inaccurate or becomes inaccurate
  • the Loan Estimate expires

When an exception applies, the creditor generally must provide an updated Loan Estimate within three business days.

Disclosure of Title Fees

Fees must be listed alphabetically. Any reference to a cost associated with title insurance must be preceded by: “Title – [description of fee]”. The lender’s policy must be disclosed in the “Services you can shop for category.”

To calculate, the full premium should be used without any adjustment that might be made for the simultaneous purchase of an owner’s title insurance policy. The enhanced policy or endorsements can be used if the lender knows that these products will be purchased. Meanwhile, the owner’s policy cost should be disclosed in the “Other” category. To calculate, use the full owner’s title insurance premium and add the simultaneous issuance premium for the lender’s coverage. Then, deduct the full premium for lender’s coverage.

‘Optional’ Owner’s Title Insurance

While the Bureau’s integrated forms make improvements in the way they provide information to the consumer, they fall short in their disclosure of title-related fees to consumers. In the final rule, owner’s title insurance is labeled as ‘optional’ on both the Loan Estimate and Closing Disclosure. The CFPB has said the use of the word “optional” did not impact consumers’ decision to purchase title insurance. ALTA will continue to work with the CFPB on this issue.

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Washington, D.C. 20036-5828
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