CFPB Proposes Updates to “Know Before you Owe” Mortgage Disclosure Rule
Tuesday, August 16, 2016
The Consumer Financial Protection Bureau (CFPB) proposed updates to its Know Before You Owe mortgage disclosure rule to formalize guidance in the rule, and provide greater clarity and certainty. The changes would augment implementation of the Know Before You Owe rule, which took effect last year, and help facilitate compliance within the mortgage industry.
The CFPB seeks input from a wide range of stakeholders and invites the public to submit written comments on the proposal. Comments are due Oct. 18, 2016 and will be weighed carefully before final regulations are issued.
The Know Before You Owe mortgage disclosure rule took effect Oct. 3, 2015. The CFPB’s rule created new, streamlined forms that consumers receive when applying for and closing on a mortgage. The rule put in place requirements about when the new forms are given to the consumer and limits to changes on the original loan estimate. In addition to clarifications and technical corrections, the proposed amendments address a handful of other issues within the rule. The proposed change of most interest to title companies relates to information sharing:
Privacy and sharing of information: The rule requires creditors to provide certain mortgage disclosures to the consumer. The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a closing disclosure to consumers, sellers, and their real estate brokers or other agents. The Bureau is proposing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.
Although the proposed rulemaking addressing information sharing, reviewing closing instructions carefully is always a good idea because many lenders prohibit settlement agents from sharing the Closing Disclosure with third parties, including real estate agents.