CFPB Rolls out Disclosure Toolkit, Dampens Delay Speculation

Even as some in the industry apparently hope for a reprievernfrom implementing new mortgage disclosure forms the Consumer FinancialrnProtection Bureau (CFPB) has rolled out a consumer toolkit to aid the transitionrnto them.  The toolkit, part of CFPB’s “Know Before You Owe” mortgage initiative, is designed tornhelp consumers take full advantage of the new Loan Estimate and ClosingrnDisclosure forms which go into effect on August 1.  </p

CFPB says the toolkit is intended to replace thernHousing and Urban Development created Shopping for Your Home Loan: Settlement Cost Booklet which lenders must currently provide to mortgage applicants.  Creditors will be required to provide therntoolkit to mortgage applicants no later than three days after mortgagernapplications.  Other industryrnparticipants, including real estate professionals, are encouraged to provide itrnto potential homebuyers. </p

The toolkit provides a step-by-step guidernwhich CFPB says will help consumers understand the nature and costs of realrnestate settlement services, define what affordable means to them, and findrntheir best mortgage. It contains interactive worksheets and checklists, conversationrnstarters for discussions between consumers and lenders, and research tips tornhelp consumers seek out and find important information. An interactive electronicrnversion will also be available as well as one in the Spanish language. </p

“This toolkit is a great resource forrnconsumers navigating the home-buying process, and will help consumers makernwell-informed decisions about the biggest financial transaction of their life,”rnsaid CFPB Director Richard Cordray. “The new mortgage disclosure forms comingrnin August will help consumers comparison shop for mortgages and avoid surprisesrnat the closing table. We are releasing this toolkit well in advance of therneffective date to help the mortgage industry come into compliance with the newrnrules.” </p

Meanwhile, a remark in a speech to a mortgagernindustry group given by Steven Antonakes, CFPB’s deputy director on March 25 hasrnstoked hope that implementation of the forms might be delayed.   Antonakes said, that to the extent thernBureau receives information or hears directly from vendors that they aren’trngoing to be ready for the forms “then that should be discussed.”  He continued, “I can’t promisernyou [changes] but to the extent we will have a better understanding of thernconcerns, that is something we will consider.”</p

The Bureau almost immediately slapped down speculation, issuing arnstatement that said there were no plans to postpone use of the forms and that, “ThernDeputy Director was pointing out that the Bureau is open to considering newrninformation from stakeholders, not to delaying the deadline.”  However comments and analysis on-linernindicate that many lenders are holding out hope for an extension.</p

The Mortgage Bankers Association (MBA) said through a statement from itsrnCEO and President David H. Stevens, that its supportsrnCFPB’s efforts to inform and educate consumers about the mortgage process andrnlooks forward to reviewing the Toolkit details and providing input.   “”Thisrn[the Toolkit] announcement is a helpful reminder that the mortgage lendingrnindustry is there for those entering the housing market and that the Americanrnhomebuyer should go out and shop for a home loan with confidence knowing thatrnthey will be backed by a national network of lenders all following the same setrnof consumer protection standards for their customers.” </p

Richard J. Andreano, Jr. provided a detailed breakdown of the Toolkit forrnBallard and Spahr’s clients on its CFPBrnMonitor blog, pointing out that it is focused on home purchasing andrnobtaining a purchase money mortgage, paying little attention tornrefinancing.  The Toolkit’s emphasis isrnon the consumer’s ability to repay and on mortgage affordability and it “appearsrnto reflect a bias in favor of fixed rate loans, a 20% down payment, and HUDrncounseling.”  </p

Andreano says it “discourages loans with balloon features and prepaymentrnpenalties and encourages consumers to shop with at least 3 differentrnlenders.  Curiously, while the list of possible lenders for consumers tornconsider includes banks and credit unions, there is no direct mention ofrn”Mortgage Bankers.”  Instead, only Mortgage Brokers arernlisted.   While the reference to “online lenders” might be intendedrnto include Mortgage Bankers,” many Mortgage Bankers are not online lenders.”

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.