The Consumer Financial Protection Bureau announced that it has added two updates to the “Know Before You Oweâ€ mortgage disclosure rules.
The CFPB notes that for the past 30 years, it was required by federal law for mortgage lenders to provide consumers with two different disclosures within three business days following the receipt of a mortgage application. Then at closing, lenders were federally required to provide two more forms.
The Bureau says these forms were often confusing and contained overlapping information. Consequently, the Dodd-Frank Wall Street Reform and Protection Act worked to make this information more accessible and charged the CFPB with drafting disclosure forms that were easier to read. The updated forms were introduced in 2013.
As a result of additional changes that have been made, the revised mortgage disclosure documents now require creditors to provide a loan estimate within three days after a home buyer secures a floating interest rate. Originally, creditors provided revised loan estimates on the same date the rate was locked.
Furthermore, there has been an addition on the loan estimate form for loans associated with new home construction. The form has a space where creditors can include information letting consumers know that they might get an updated loan estimate for a construction loan that might take more than 60 days to settle.
All of the updates will go into effect in August. Go here for the full report.