CFPB Releases New Mortgage Disclosure Forms

By Kyle Chezum Updated on 5/30/2011

 

The Consumer Financial Protection Bureau (CFPB) has proposed new simplified mortgage disclosure forms that will help borrowers better understand the mortgage products they are purchasing and prevent unscrupulous lenders from taking advantage of borrowers' ignorance.  At present, borrowers receive a multi-page Good Faith Estimate and a several-page Truth in Lending statement when applying for a loan.  The new disclosure form would combine these and streamline the information such that it fits on just two pages, the front and back side of a single sheet of paper.

Elizabeth Warren, who has been tasked with defining the direction of the CFPB, made the following statements regarding the new disclosure form.  "A home loan is the biggest financial commitment most Americans will make in a lifetime.  With a clear, simple form, consumers can better answer two basic questions: Can I afford this mortgage?  And, can I get a better deal somewhere else?  That's good for American families and the markets they depend on."

Federal regulators have been working for years to streamline disclosure practices in order to better equip borrowers with the information needed to make wise home purchases.  The Dodd-Frank financial reform laws passed last year provide a deadline for the creation of the new form, and this has spurred the CFPB to being developing and testing potential outlines.

Professionals in the mortgage industry, as a whole, have been receptive to the proposed disclosure changes, stating that both consumers and lenders will be better off if mortgage products are fully understood and compared during the purchase process.  The CFPB will likely begin testing models of the new form in cities across the nation this year.