WASHINGTON—The CFPB Thursday released new online tools as part of its Know Before You Owe initiative.
Know Before You Owe is aimed at helping consumers navigate the mortgage process. The new tools provide an interactive, step-by-step overview of the mortgage process, help homebuyers decide how much they can afford to spend, and help consumers explore and use the new Know Before You Owe mortgage forms, the CFPB stated.
Creditors will have to begin providing the new forms on Oct. 3, 2015, making it easier for consumers to understand mortgage options and comparison shop between multiple loan offers, the agency added.
“Our new mortgage forms reduce the information gap between lenders and consumers, shedding light on a process that often feels like a mystery,” said CFPB Director Richard Cordray. “It is time consumers have more power in the mortgage process, and our new forms and online tools will help make that a reality.”
Know Before You Owe Mortgage Forms
The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the bureau to combine certain federal mortgage disclosures that consumers receive when taking out a mortgage. In November 2013, after extensive testing, the CFPB finalized the combined, easier-to-understand Know Before You Owe mortgage forms – the Loan Estimate and Closing Disclosure. Consumers applying for most mortgages on or after Oct. 3, 2015, will receive the new disclosures. The forms will better help them understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table, the bureau explained.
“The Loan Estimate details the transaction, including the estimated loan and closing costs. Consumers can use this form to do apples-to-apples comparison shopping between loans,” the CFPB said. “The Closing Disclosure, which details the final transaction, is provided to consumers at least three business days before closing. This time period allows consumers to confirm whether they are getting what they expected, ask questions, and negotiate over any changes. The Loan Estimate and Closing Disclosure mirror each other, making it easy to compare estimates with final loan terms.”