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13,000 Lessons Learned

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As you might recall, the Dodd-Frank Act instructed the CFPB to replace the Truth in Lending form and the Good Faith Estimate with a single integrated mortgage disclosure. Instead of two forms that are long and complicated and contain overlapping information, our aim is to design a single form that is easier to explain and understand.

We wanted to hear from the people who would be using the new form. In May, we launched Know Before You Owe to give consumers, lenders and other stakeholders a platform to give us feedback. You responded in a big way.

Next week, we’ll be asking for input again. To get an email when we do, sign up here if you haven’t already.

To learn what your feedback from the first round of tests told us, read on.

We posted two initial versions of the new disclosure form, the “Ficus” form and the “Pecan” form. We asked users to tell us which form they thought was more effective, then to leave comments on specific elements of one of them. Altogether, we received 13,096 of these comments. More than seven thousand came through the consumer version of the feedback tool and more than five thousand through the industry version.

Thanks to everyone who submitted comments. We have spent the last several weeks reading them, and we want to share with you some of what we read.

  • “These issues are things I worry about, but are usually hidden in fine print. I like that it is obvious.” We’re so glad you think so—we put a lot of time and effort into those drafts, so that was really encouraging. More than half of the comments asked us to keep something about the initial drafts we posted last month, often because it was helpful or easy to understand.
  • The sections that received the most attention were Cautions, Key Loan Terms (Ficus), and Summary (Pecan), which collectively received 31% of the comments. Most of you thought these sections were useful, but you also offered thoughtful suggestions about how to make them clearer and easier to understand. Both online and in the first round of one-on-one consumer testing, a lot of people thought that the “Ficus” Key Loan Terms section was easier to follow than the “Pecan” version. But others thought it was useful to have all the Cautions in one place as they are on the “Pecan” form. We’re going to try to do both: As you’ll see next week, we’ve revised these sections in an effort to combine the most helpful aspects of each design.
  • The second most talked-about part of the forms was the Projected Payments section, with 20% of comments. Many people found this section useful. For instance, one reader wrote that it “clearly states what I might be facing in the future.” However, many of you found the way we presented the information unclear, and you didn’t always agree with each other about where to put this section. Some were confused by seeing the payment information before the key loan terms; others liked it at the top because “at first glance, you can see if the closing amount and monthly payments are affordable.” We’ve used your comments to help us revise the layout.
  • The Comparisons section attracted a lot of interest (8% of comments), because it would be “helpful if shopping around for loans.” But on our first attempt, the language confused many of you and our in-person testing participants. We’ve used that feedback to simplify and clarify the section.

One last note: We were delighted to get so many constructive comments. We are still thinking about how best to implement many of the suggestions we received, so just because we did not address a particular feature in this round does not mean it won’t change in future rounds.

When we launch another round of Know Before You Owe next week, you’ll see that the focus of our online tool has shifted. Last time, we asked for feedback on the whole form. This time, we are going to focus a little more closely on one aspect: how effective the form is at communicating closing costs. Closing costs are complicated, and we need your help to make sure our form deals with them in the clearest way possible.

We are committed to creating a simpler form that works for consumers and lenders. But we can only do that with your continued input.

We will have more details about the next round when we launch. Sign up to get an email alert to make sure you have your say.

  • Justin Bailey

    For this next round, I would like to see what comments I
    made previously. I don’t remember what I commented on specifically –
    being able to see them again (or review them offline) would be really
    useful. If there isn’t time for that before the next round, maybe by the final round?

    I was really glad to be able to review the drafts you posted previously. I love what you guys are doing here.

  • NerveTonic

    Hey!  Thank you, Government!

  • Kandothat

    Ah, the beauty of a collabrative, thorough, process.  

    I love that the CFPB is trying their best, then collecting feedback from all the players on that attempt, and evovling again and collecting more information. Experts and leaders should make the ultimate judgments but input from all yields best results.

    In my little corner of corporate world, there is often not patience for collecting all the needed info, nor doing several iterations, but when a more thorough process is used, it yeilds great results.

    Given these forms will be used by sooo many, have such a great effect on consumers, and given we do not want to have to revise them frequently, I think it’s great that CFPB is being thorough about this.

  • Bart Bartholomew

    While I believe both are significant improvements on the current forms which are redundant, contradictory and confusing, both still have some shortcomings. Both indicate a date without specifying the significance of that date. Is it the date of the form or the date of the interest rate lock? What significance does the expiration date hold? Is it the expiration of the quote or the interest rate lock? (On page 2 of each form under “Important Dates”, the forms indicate an expiration date of the estimate however nowhere on either form is there any indication as to whether or not the interest rate has been locked or not.)

    I like the addition of the section indicating how much of the intial loan amount will be paid at the end of 5 years.

    I also like the explanation of APR. A more clear and concise definition than has been shown on previous forms.

  • http://assetprotection365.com/ luke

    I’m glad that CFPB is on the ball.

  • Anonymous

    Commenting as a software vendor that will have to implement the changes being proposed.  Within the Projected Payments section, there appears to be errors in your calculations.  You list the P&I Payment as 1,919.00 @ 3% interest for years 6 thru 30.  This payment amount includes PMI which will reduce over time and at either 78% or at midterm of the loan, drop off.  None of this is shown on your examples.  In addition, it appears that you are keeping the escrow payment the same for the life of the loan, this is certainly a misrepresentation of what will happen.  Currently regulations allow for escrow analysis to include a Cost of Living increase for escrow amounts.  Shouldn’t that be included in this as well.

    Will the Loan ID# field be required?  My reason for asking is that we have systems that allow borrowers to submit applications via the internet and can currenly produce TILs and GFEs as part of that process.  However, no loan number is assigned to the application until it is submitted for processing.  So my question is did you take this sort of process into account when asking for this field?  If the loan has not had this assigned yet, will this make us out of compliance?

    One last item, it would appear that the APR quoted on this loan is based on the initial 2.75 interest rate, not the maximum rate as everything else is.  What is the reason for this, very confusing to calculate differnt items based on different parameters.

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