Even as some in the industry apparently hope for a reprieve from implementing new mortgage disclosure forms the Consumer Financial Protection Bureau (CFPB) has rolled out a consumer toolkit to aid the transition to them. The toolkit, part of CFPB's "Know Before You Owe" mortgage initiative, is designed to help consumers take full advantage of the new Loan Estimate and Closing Disclosure forms which go into effect on August 1.
CFPB says the toolkit is intended to replace the Housing and Urban Development created Shopping for Your Home Loan: Settlement Cost Booklet which lenders must currently provide to mortgage applicants. Creditors will be required to provide the toolkit to mortgage applicants no later than three days after mortgage applications. Other industry participants, including real estate professionals, are encouraged to provide it to potential homebuyers.
The toolkit provides a step-by-step guide which CFPB says will help consumers understand the nature and costs of real estate settlement services, define what affordable means to them, and find their best mortgage. It contains interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information. An interactive electronic version will also be available as well as one in the Spanish language.
"This toolkit is a great resource for consumers navigating the home-buying process, and will help consumers make well-informed decisions about the biggest financial transaction of their life," said CFPB Director Richard Cordray. "The new mortgage disclosure forms coming in August will help consumers comparison shop for mortgages and avoid surprises at the closing table. We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules."
Meanwhile, a remark in a speech to a mortgage industry group given by Steven Antonakes, CFPB's deputy director on March 25 has stoked hope that implementation of the forms might be delayed. Antonakes said, that to the extent the Bureau receives information or hears directly from vendors that they aren't going to be ready for the forms "then that should be discussed." He continued, "I can't promise you [changes] but to the extent we will have a better understanding of the concerns, that is something we will consider."
The Bureau almost immediately slapped down speculation, issuing a statement that said there were no plans to postpone use of the forms and that, "The Deputy Director was pointing out that the Bureau is open to considering new information from stakeholders, not to delaying the deadline." However comments and analysis on-line indicate that many lenders are holding out hope for an extension.
The Mortgage Bankers Association (MBA) said through a statement from its CEO and President David H. Stevens, that its supports CFPB's efforts to inform and educate consumers about the mortgage process and looks forward to reviewing the Toolkit details and providing input. ""This [the Toolkit] announcement is a helpful reminder that the mortgage lending industry is there for those entering the housing market and that the American homebuyer should go out and shop for a home loan with confidence knowing that they will be backed by a national network of lenders all following the same set of consumer protection standards for their customers."
Richard J. Andreano, Jr. provided a detailed breakdown of the Toolkit for Ballard and Spahr's clients on its CFPB Monitor blog, pointing out that it is focused on home purchasing and obtaining a purchase money mortgage, paying little attention to refinancing. The Toolkit's emphasis is on the consumer's ability to repay and on mortgage affordability and it "appears to reflect a bias in favor of fixed rate loans, a 20% down payment, and HUD counseling."
Andreano says it "discourages loans with balloon features and prepayment penalties and encourages consumers to shop with at least 3 different lenders. Curiously, while the list of possible lenders for consumers to consider includes banks and credit unions, there is no direct mention of "Mortgage Bankers." Instead, only Mortgage Brokers are listed. While the reference to "online lenders" might be intended to include Mortgage Bankers," many Mortgage Bankers are not online lenders."