The Consumer Financial Protection Bureau has received more than 13,000 comments on two draft proposals for a simplified mortgage disclosure form it’s in the process of developing, and will be asking for additional comments on revisions it plans to post next week.
When the new loan disclosure form is finalized, it will replace the separate forms borrowers are currently provided to satisfy requirements of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).
The TILA disclosure form in use today, developed by the Federal Reserve, focuses on loan terms. The "Good Faith Estimate," or GFE, developed by the Department of Housing and Urban Development to satisfy RESPA requirements, is designed to help borrowers also evaluate trade-offs between a loan’s interest rate and settlement service charges.
But lenders and groups representing consumers and the real estate industry have complained that having two sets of loan disclosures is confusing to borrowers. In creating the CFPB, one of the jobs Congress tasked it with was to come up with a uniform loan disclosure form.
"We were delighted to get so many constructive comments," CFPB said, including more than 5,000 from the real estate industry. "We are still thinking about how best to implement many of the suggestions we received, so just because we did not address a particular feature in this round does not mean it won’t change in future rounds."
In the next round of comments, CFPB is particularly interested in hearing how effective the form is at communicating closing costs.
"Closing costs are complicated, and we need your help to make sure our form deals with them in the clearest way possible," the bureau said.
Some lenders offer loans that may carry higher interest rates but which provide settlement services like title insurance at a reduced or no charge — a situation that HUD’s GFE was intended to address.