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FDIC Consumer News

Fall 2015

Sample disclosures: Consumer Financial Protection Bureau

loan documents

Sample disclosures: Consumer Financial Protection Bureau

More to Know About the New Disclosures for Mortgage Loans

If you apply for a residential mortgage loan, you will now see a new look in the disclosures because of a rule that took effect October 3, 2015.

The Consumer Financial Protection Bureau (CFPB) has adopted a "Know Before You Owe" rule that consolidated and simplified mortgage disclosure forms. The new disclosures should make it easier for you to understand the key terms — and risks — of the loan options you consider.

A new "Loan Estimate" combines information previously provided on two forms to explain the costs and terms of the proposed loan. It emphasizes important information for consumers to have when deciding on a loan, such as the interest rate, the number and amount of payments, closing costs, and whether payments can increase during the loan term and, if so, by how much.

The lender or mortgage broker must give this form to a consumer within three business days after the application is submitted. "With this timely, clear information in hand early in the process, consumers should be able to more effectively comparison shop among creditors and among different kinds of loan terms and products," said Kathleen Keest, an FDIC senior policy analyst.

A new "Closing Disclosure" summarizing the key terms of the final loan contract has replaced two separate documents. You should receive this single disclosure form at least three days before going to settlement on the loan. "In the past, the final disclosures with the actual terms of the loan were typically given at the loan closing, with all the other paperwork," Keest noted. "Now, having this simplified disclosure in hand at least three days before the closing gives you time to carefully review the loan to make sure that you are getting what you bargained for."

The CFPB website has a home loan toolkit, samples of the new disclosures and other guidance on the mortgage selection process.