With four months to go before the mortgage application process gets a total overhaul, the Consumer Financial Protection Bureau is beginning to educate consumers on the changes they can expect to encounter if they purchase a home after Aug. 1.
That’s when the bureau’s new TILA-RESPA Integrated Disclosures rule, or TRID, takes effect. Part of the CFPB’s “Know Before You Owe” initiative, TRID consolidates four existing disclosures currently required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into two forms: a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation of the transaction.
The new “Know Before You Owe” toolkit provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what “affordable” means to them and find their best mortgage product. The toolkit features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information.
The CFPB released the final TRID rule in November 2013 and set an effective date for Aug. 1 to giving the affected industries enough time to digest the 1,800-page rule and its implementing regulations, and make the appropriate changes to their processes, operations and systems to accommodate the new forms. The bureau has since conducted several webinars to address industry concerns and questions ahead of implementation.
Now the CFPB is starting outreach efforts to homebuyers and sellers with the release of a toolkit to guide them through the process of shopping around for a mortgage and buying a home. Designed to replace the Department of Housing and Urban Development booklet that creditors currently provide to mortgage applicants, the toolkit is intended to be used in connection with the new Loan Estimate and Closing Disclosure forms. Creditors must provide the toolkit to mortgage applicants as a part of the application process, and other industry participants, including real estate professionals, are encouraged to provide it to potential homebuyers.
The PDF version of the toolkit is available here.
The CFPB is also making available an electronic version with fillable text fields and interactive check boxes so consumers can save and print their progress as they work through the toolkit. The electronic version meets federal accessibility standards to ensure that all consumers, including those with disabilities, can use the resource. A Spanish-language version will be made available later this year.
