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Consumer Financial Protection Bureau

Efforts to Create New HUD-1 Debated at Federal Conference

May 10, 2012

The Consumer Financial Protection Bureau’s (CFPB) efforts to create new combined mortgage disclosure forms to replace the current TIL, GFE and HUD-1 were the focus of a panel titled “A New HUD-1 is Coming ... Will You Be Ready?” during ALTA’s Federal Conference and Lobby Day.

Panelists included Ben Olson of the Consumer Financial Protection Bureau, Scott Olson who is former staff to Rep. Barney Frank and Ken Markison of the Mortgage Bankers Association. Justin Ailes, ALTA’s vice president of government and regulatory affairs, moderated.

Scott Olson said the Dodd-Frank legislation focused on three major types of reform, including improving the quality of mortgages, prohibit anti-consumer practices and improve mortgage disclosures to help consumers understand products they are buying.

The CFBP has been charged with combining the Truth in Lending disclosure and the HUD-1 in a way to allow consumers to better understand the transaction and help industry comply with regulations.

“We have no other agenda outside of that,” Ben Olson told attendees.

Since launching its Know Before You Owe initiative, the CFPB has released nine iterations of the disclosure forms receiving more than 27,000 comments in its website. Olson said that if you did not receive a response from the Bureau, every comment is read by someone on the Bureau staff.

“We will keep that process going as we move forward,” Olson said.

What Happens Next?

The Bureau is in the process of drafting the regulations now and will release its proposed form and regulations on July 21, 2012. Olson expects a 60- or 90-day public comment period. The Bureau also will do additional outreach with groups.

After collecting feedback, the CFPB will re-evaluate and determine what needs changed and perform qualitative testing before conducting quantitative testing with a large number of consumers. The Bureau will then go into the agency consultation process and ultimately propose a final rule.

“We’ve heard of the challenges of updating software and training staff,” Olson said. “We know you’ve just done this and we are sympathetic. We will solicit comments on the amount of time you need to comply with the new rules. We need to know the challenges you face.”

Markison offered the lending community’s perspective and said the accompanying rules are just as important as the forms. He said the draft forms are a “mixed bag for us at this point,” adding that changing the tolerance provision again is a mistake.

“We need to get this nailed down in a way so we aren’t coming back to it in three or five years,” Markison said.

Several times during the panel, Olson encouraged members to send comments to the CFPB and explain how the draft forms will impact business and consumers. ALTA members can email comments to the CFPB at

The draft disclosure forms also were the focus during lunch as Kelly Thompson Cochran, deputy assistant director for regulations for the Bureau, was the luncheon speaker.

She provided an overview of the Bureau’s organization structure and its primary focus of working through the Dodd-Frank provisions. She said many of the Dodd-Frank requirements become self executing come Jan. 1, 2013 if the Bureau does not issue regulations.

“One of our significant concerns is helping people work through the ambiguity of the statute,” Cochran said. “Over the next several months we will be issuing proposals to work through different parts of the Dodd-Frank rulemakings.”

Cochran said the Bureau is thinking about ways to support industry when they are working to comply with new rules.

“We know businesses are acting in good faith, and when a new rule is implemented, we know it takes time to understand the rules,” Cochran said. “We are working to make the rules more navigable on the website and more intuitive, but it will take time to flesh that out. We are looking forward to dialogue with industry and address issues over time.”

Attendees peppered Cochran with questions ranging from who will fill out the new Settlement Disclosure, the possibility of a standard form, consumer testing and implementation costs.

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