CFBP Proposal On Mortgage Disclosures Wins Praise
WASHINGTON – The Consumer Financial Protection Bureau’s prototypes for a single mortgage disclosure form won praise from industry groups yesterday for their streamlined format, as well as the unorthodox way they are being developed.
Under the Dodd-Frank Act, the CFPB does not have to issue a final version of the form until July 2012. But the bureau already has invited industry representatives, bankers and consumer advocates to weigh in on the model forms, which will be tested on focus groups and revised throughout the summer before the formal rulemaking process even begins, according to American Banker, an affiliate of Credit Union Journal.
“I think what was probably the most refreshing was just the fact that you had a room of bankers there … folks who use this every single day and have to explain it to customers every single day,” Ron Haynie, president and CEO of ICBA Mortgage, said about a meeting with CFPB officials this week. “And the folks at the CFPB were asking questions – does this work? They want the feedback, and bankers are not a shy bunch.”
Haynie and other industry observers said the two prototypes released Wednesday are a good first step toward merging the disclosure forms required under the Truth in Lending Act and Real Estate Settlement Procedures Act.
“Each form has a slightly different design, but both would break down the mortgage offer to highlight key terms, such as interest rate and monthly payment, and would caution borrowers about certain terms, such as increasing loan amounts or balloon payments.”
Both also include a section to help consumers compare the offer with other loans, and lays out projected payments over the life of the loan. They break down expected closing costs, and use check boxes to indicate whether a loan requires an escrow account or mortgage insurance.
Although it was still early, the reviews for both forms were positive, according to American Banker.