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Know Before You Owe: New Mortgage Disclosures, New Rule


New Mortgage Disclosures, New Rule

Today, the process of getting a mortgage is easier to understand because the Know Before You Owe mortgage disclosure rule is now in effect. The disclosures required for getting most mortgages have been redesigned to help you shop around to compare offers and find the loan that’s the best for you. We’ve also required lenders to give you more time to review the terms of your mortgage before accepting them, so that you can ask questions of your lender or seek advice from a housing counselor or lawyer.

You can learn more about this rule at

We’ve put together some frequently asked questions about the new rule and how it will make the mortgage process easier for you.

What happened?

If you apply for a mortgage on or after October 3, our new disclosures are required for most mortgages. For most kinds of mortgages, you will have three business days to review your Closing Disclosure before you close. This rule is a part of our Bureau-wide Know Before You Owe mortgage initiative. We are working to make the costs and risks of financial products and services clearer, so you can make better, more informed decisions.

What’s the rule?

The Know Before You Owe mortgage disclosure rule, which was mandated by the Dodd-Frank Act, combines the required federal disclosures for most mortgages. It also requires lenders to give you your Closing Disclosure three business days before you close. This three-day period gives you time to understand the terms of your loan, compare it to the Loan Estimate you were given, and ask your advisors or lender any questions.

What are the disclosures?

The disclosures are forms that you get when you work with a lender to get a mortgage. These forms are required to help you understand the terms of your mortgage before accepting them. If you applied for a mortgage before October 3, 2015, you would have received a Good Faith Estimate and an initial Truth-in-Lending disclosure. Now, for most mortgages, you will get a Loan Estimate within three business days of submitting an application. At least three business days before you close, you will also get a Closing Disclosure. It contains a summary of the final terms of your loan. This form replaces the HUD-1 Settlement Statement and final Truth-in-Lending disclosure forms for most mortgages.

Why did you change the forms?

For more than 30 years, federal law has required lenders to provide two different disclosure forms to consumers applying for a mortgage and two different disclosure forms to consumers before they close on a mortgage. Two different agencies developed these forms since Congress first mandated them, and they had a lot of overlapping information. The two new forms, the Loan Estimate and the Closing Disclosure, combine information and mirror each other, so you can easily compare the terms you were given on the Loan Estimate with the terms on the Closing Disclosure. We tested them with consumers, lenders, and other mortgage professionals and found that the new forms help people better understand their mortgage terms and make it easier for people to find the information they need.

Will this rule delay my closing?

For most situations, the answers is no. The rule gives you three business days to review your Closing Disclosure and check it against your Loan Estimate to ensure that the deal you were proposed in the estimate is the deal you are getting. Our research found that, prior to this rule, consumers felt there wasn’t enough time to review their documents, so the rule gives you time to ensure you feel comfortable before you sign on the dotted line for your mortgage. Only where three very important things change about your loan after you get your Closing Disclosure does the rule require a second three-day review period. Minor, ordinary changes do not require an additional three-day review period.

This is a lot of information. How can I learn more about the mortgage process?

We know the prospect of getting a mortgage can seem very confusing, but we have a lot of resources that will help guide you through the process.

  1. We have a suite of tools and resources called “Owning a Home.” Here you will get step-by-step explanations of how to go about getting a mortgage and what to consider when making decisions. You’ll also find tools and resources to help you learn more about your options, make decisions, and prepare for closing.
  2. Your Home Loan Toolkit” is a downloadable booklet you can use to learn more about the mortgage process. It offers you easy to understand information, and gives you conversation starters to help you through key points in the mortgage process.
  3. When it’s time for you to get your Loan Estimate, we have a resource in “Owning a Home” that guides you through the form, page-by-page. We help you double-check the details and get definitions for unfamiliar terms. We have a similar resource for the Closing Disclosure.
  4. We also offer a tool to help you find a housing counselor. A housing counselor can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, usually at little or no cost to you.

If you have more questions, please visit where you’ll see all of our supporting documents, a timeline of our work on this project, and a video that explains the initiative. There are also answers to many detailed questions about the forms and the mortgage process in AskCFPB.

Know Before You Owe: Making the mortgage process easier for you


Know Before You Owe: Making the mortgage process easier for you

Since opening our doors over four years ago we’ve heard from homebuyers that the process of buying a home is overwhelming and confusing. We’ve heard that closing is often rushed, not allowing enough time to review before signing on the dotted line. For consumers who apply for most mortgages on or after October 3, 2015, the stress of shopping for a mortgage will be reduced, as our new mortgage disclosure rule takes effect. The new rule and disclosures ease the process of taking out a mortgage, helping you save money, and ensuring you know before you owe.

Here’s what will change:

  • Four overlapping disclosure forms will be streamlined into two forms, the Loan Estimate and the Closing Disclosure.
  • You’ll have more time to review your closing documents. Currently, lenders must give you your HUD-1 Settlement Statement disclosure 24 hours in advance, if you request it; after October 3, you’ll receive your Closing Disclosure three business days before you sign the forms and accept the terms of your mortgage, no request needed.

Here’s how these changes will improve the mortgage process:

  • The new forms will make it easier to understand complicated mortgage terms.
  • The Loan Estimate makes it easier to shop around and compare loan offers from multiple lenders. Consider applying for loans from at least three lenders before choosing a mortgage so you can find the best deal for you.
  • The three days required between getting your Closing Disclosure and signing on the dotted line allow you to make sure there aren’t major changes from the deal you were offered on your Loan Estimate. It also gives you time to ask your lender all the questions you might have about the terms of your mortgage and consult with a lawyer or housing counselor.

More resources to help make mortgages understandable

We’ve released “Your Home Loan Toolkit.” The toolkit has worksheets and conversation starters to help you at key points in the mortgage process. You’ll receive the toolkit when you apply for a home purchase mortgage. However, you can also download it now.

In addition, while these forms make the process of taking out a mortgage easier, we have also created digital resources to help you use and understand your Loan Estimate and Closing Disclosure. These tools give you definitions of terms like “balloon payments” and “points.” They also show you where to look, page-by-page, to check that terms and numbers on both documents match up.

For a better understanding of what it takes to get a mortgage, we’ve updated our “Owning a Home” site with an overview of the mortgage process. This step-by-step guide to getting a mortgage takes you from creating a budget to filing away your important closing documents after you accept the terms and sign on the dotted line. “Owning a Home” also has tools and resources to help you learn more about your loan options, make decisions, and prepare for closing.

Housing counselors approved by the U.S. Department of Housing and Urban Development (HUD) are another great resource. They can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. To find a housing counselor near you, use our search tool.

The new forms work

Over the past four years, we’ve done extensive work, including testing the new forms with consumers around the country and getting feedback from industry. In our testing, we determined that these new forms helped people better understand the terms and types of mortgages in the market.

From our very first day as an agency, we’ve been working hard to improve your experience when it comes to purchasing and paying for your home. We’ve been working to make the market safer by educating mortgage consumers, challenging practices that are illegal under federal consumer protection law, and by enacting new mortgage lending rules. In addition, we’ve worked to get responses to your mortgage complaints, and we’re exploring ways to further improve the closing experience.

You have the right to compare offers and understand the terms before you sign on the dotted line. And the information you use should be clear and easy to understand. After four years of work, these new forms and tools will help you shop for the best deal and avoid costly surprises when you sign on the dotted line.

The mortgage process is easier when you know before you owe.

Updated mortgage data available


Last year, we released a web-based tool that provides the public with easier access to mortgage data for 2007 through 2012. Today, we’re updating the database with 2013 data, in coordination with the Federal Financial Institutions Examination Council.

What’s HMDA?

The Home Mortgage Disclosure Act or HMDA requires many financial institutions to maintain, report, and publicly disclose information about mortgages. HMDA data for 2013 included approximately 17 million records from 7,190 financial institutions.

Get started

If you’re new to HMDA data, start with our introductory video. You’ll learn about the data, how it’s collected, why it’s useful, and what variables it contains. Then, check out our maps and charts.

Explore the data and do your own analyses. You can start with our suggested filters, and then customize them to fit your needs. Use the summary tables to compare data across state, loan type, and more. Want a chart? You can create a summary table and then download it to create a chart using your favorite software.

Share your findings

We’re excited to see what you do, and encourage you to explore the data. Leave us a comment with your ideas or use #cfpbdata on Twitter to share what you find.

Know Before You Owe: Just one example of our approach to policy-making


As the mortgage disclosure team said last week, we based Know Before You Owe on the idea that disclosure information is clearer when the people who will have to use those disclosures participate in designing them. We got feedback from many sources in many ways:

  • In-person testing of the forms in cities across the country from consumers and from people in the mortgage industry, both before proposing the new disclosures and after;
  • Online publication of various iterations of prototypes of the forms as we tested them and getting more than 27,000 clicks and comments to tell us what worked (and what didn’t);
  • Quantitative validation study with about 850 consumers of how well consumers understand the new disclosures compared to the ones currently in use (we’ll talk more about the results of that study in the days to come); and
  • Ongoing dialogue with industry groups, financial institutions, consumer advocates, policymakers from across government, and designers throughout the design process.

This testing and iteration process occurred alongside legally required feedback such as a Small Business Review Panel before we issued the proposed rule, and the public comment period for the proposed rule.

We started this prototyping and research even before the Bureau began regulating consumer financial products and services. In the process, we established a pattern of public inclusion in what we create. We have since taken on additional projects that rely on this pattern to succeed. In each case, we believe it has made us better at our work and will continue to do so.

Consumer tools

In April 2012, we introduced a beta version of a tool to help students compare the costs of college. Based on the feedback we got, we made improvements and re-released it along with a number of other tools to help students understand paying for college.

Now we’re working on similar tools to help people interested in owning a home. In each case, we continue to take feedback. We don’t believe that products to help consumers understand their options are ever complete. When we make new consumer tools, we commit to analyzing how people use them. The tools should change as we understand more about what’s useful or necessary, and what’s not.

Making information more accessible

We maintain a regularly updated public database of consumer complaints we receive. We also maintain an API that lets people build on top of that data.

A few months ago, we created a new platform to publish home mortgage data. Not every good idea for using consumer financial market data is ours; these platforms give the public access to data about their own experiences.

Last month, we launched a prototype tool to make regulations easier to read, understand, and use. After a series of user interviews and a number of prototype usability tests, we’ve piloted eRegulations with one regulation. Before making any decisions on what to do with it next, we’re asking people who need to understand changes to Regulation E to use it and let us know how it works for them.

Prototyping better disclosures

The prototyping efforts of Know Before You Owe laid the groundwork for another initiative. Federal consumer finance regulations should protect consumers, not hinder innovations that help them. Through Project Catalyst, we work with innovators to do just that. Someone who spots a way to make regulations more innovation-friendly can work with us to design experiments. Someone who thinks there’s a way to make disclosures clearer can work with us to start a trial that tests how well their idea works.

Open source software

Source code written by our staff is public domain by default. Anyone can use and build on it as long as it meets a few standards. And we are committed to publishing it in an online source code community. CFPB Open Tech gives the public easy access to free, open source software they can use as the basis for their own new tools and approaches. In turn, we get to review ideas from other developers and decide whether to use them to make our software better.


In short, we value building things with public participation. It comes back to the same basic point: if you know people are going to have to use something, you should work with them to figure out what makes it useful. It’s an idea we have espoused since the start of Know Before You Owe, one we’re going to continue to build on.

Know Before You Owe: preparing to finalize the new mortgage disclosure forms


Two and a half years ago, we began a line of work we call Know Before You Owe. The work that we did as part of that project helped lead us to the TILA-RESPA final rule we issued Wednesday. Among other things, that rule requires new mortgage disclosures: a Loan Estimate the consumer gets when applying for a mortgage, and a Closing Disclosure when the consumer is ready to close on the mortgage. Today we’re looking back at the project that helped get us here.

What is Know Before You Owe?

When you buy a financial product or service, you should understand the terms you’re offered before you sign on the dotted line. You should be able to compare different products effectively and make the right choices for yourself and your family. And the information you use to make those decisions should be clear and easy to understand.

This information is usually presented in writing, in forms like disclosures, contracts, and offer letters. We believe that the best way to make sure this information is clear is for the people who actually have to use the information to help us design them. So that’s exactly what we asked people to do. We call this project Know Before You Owe.

How does it apply to mortgages?

We started Know Before You Owe in May 2011 with mortgage disclosures. In the Dodd-Frank Act, Congress directed us to combine the existing disclosures you get when you apply for and close on a mortgage: the Truth in Lending disclosures, the Good Faith Estimate, and the HUD-1 Settlement Statement. These disclosures contain some of the basic facts about home loans, and they should help you pick the right mortgage product for you. But they have overlapping information and complicated terms, and they can be just plain difficult to understand.

The idea is to create a single, simpler set of forms so that when you shop for a mortgage, and then again when you close on one, you can understand the basic information you need to pick the right mortgage loan for you.

Over the course of about a year, we qualitatively tested the forms with consumers, lenders, and settlement agents across the country to see how people would use the forms. We saw how they understood different types of mortgages, different terms, and different versions of the forms. We supplemented this this qualitative testing by posting the forms here on and asking people to weigh in. Over the course of the project, we received more than 27,000 comments that helped us improve the disclosures we proposed.

What’s the final rule all about?

In July of last year, we proposed the rule that would require the new forms. As expected, we got a lot more comments: more than 2,800 of them. Since the proposal, we’ve been reviewing these comments to improve the rule. We’ve also conducted a quantitative validation study with about 850 consumers in 20 locations across the country. The study compared our new forms against the existing forms. We conducted additional qualitative testing. And we reviewed what information you told us we should add to the rule to make compliance easier.

The last big milestone in getting to a final rule was … issuing the rule, which we did last Thursday. The rule we submitted to the Federal Register had a lot of information and instruction about the new disclosures: what needs to be in them; what kinds of loans and which lenders need to use them; when to start using the new forms; and more. Along with the new rule, the notice contains information about the testing, analysis, and other work we did to develop the rule. And we posted a number of other things to help people understand the rule: what it means for consumers and for industry, additional testing results, and more.

Explainer: How the final TILA-RESPA rule differs from the proposal


When we first proposed the TILA-RESPA disclosure rule, we got a lot of questions about the length of the document containing the rule. We synthesized those questions into one representative question and wrote a post to give you some answers. Now that we’re finalizing the rule, we wanted to do it again to talk about what’s changed in the last sixteen months.

So, what’s different?

Sure. Directness is probably the best approach. But let’s back up.

We received more than 27,000 individual comments and emails on the disclosure prototypes we posted throughout the supplemental Know Before You Owe project for mortgage disclosure. That’s on top of all the in-person testing we did with dozens of consumers. We also tested them with industry to make sure they could understand and use the disclosures in their business. That was all before we issued the proposal.

Once we proposed the rule, we received almost 3,000 comments, including comments received during the public comment period and additional information submitted to the record. That didn’t surprise us; this is a significant rule that affects two major federal regulations, consumers’ experience in shopping for and closing on mortgages, and almost the entire residential real estate industry. We spent a lot of time analyzing the comments and figuring out the best way to respond to them.

Did they lead to any changes to the rule?

We made a few significant changes. First, the proposal had two provisions we didn’t include in the final rule:

  • We aren’t including the “all-in APR,” as some referred to it. This provision in the proposal would have changed the definition of the finance charge, which is used to calculate the annual percentage rate, or APR. The change might have cost industry a lot and might have affected the types of loans available to consumers. A number of other mortgage rules are about to go into effect that might make these effects even bigger.

    We’re going to keep looking at this. The Dodd-Frank Act requires us to report on this rule five years after its effective date, and we’ll study this issue as part of that.

  • The proposal required machine-readable record retention. However, we heard that the data standard we were proposing wasn’t specific enough. In principle, we still think this is a good idea, but we’re going to do additional study and spend more time discussing with stakeholders before requiring any particular standard.

We also changed a couple other requirements you should be aware of.

  • The rule requires a three-day waiting period after issuing the Closing Disclosure before closing the mortgage. In the proposed rule, we said lenders should reissue that disclosure any time there are more than minor changes, followed by a new three-day waiting period. Comments suggested this might lead to frequent delays in closing mortgages. That’s clearly not good. But also not good: consumers not having time to think through significant changes. So we kept the consumers’ reviewing time in mind as we more narrowly defined the requirements.

    The new waiting period now comes only if there are substantial changes to the APR, the loan product itself changes (like a fixed rate loan becomes an adjustable rate or interest only mortgage), or the lender adds a prepayment penalty. And just to be sure, the rule guarantees consumers the right to examine the Closing Disclosure on request on the day before closing even without substantial changes.

  • The rule also requires lenders to issue the initial Loan Estimate within three days of a consumer applying for a mortgage. In the proposed rule, we included Saturdays in that three-day period. Smaller businesses like community banks and credit unions told us they’re usually closed Saturdays and this would force them to be open. That seemed like a pretty significant burden, one we didn’t want to impose, so the three-day period now includes only days the lender is actually open. If you’re open on Saturday, Saturday counts; if you’re not, it doesn’t.

Does that significantly lengthen the rule?

At least for the regulatory language, it actually isn’t much longer. The proposed amendments to regulations were 209 pages. For the final rule, that’s 279 pages.

So why does the document you sent the Federal Register seem a lot bigger than before?

It is. The preamble provides context for the proposed forms and regulatory changes. The mortgage market is big, and mortgage disclosure regulation has 43 years of history. Also, before writing the rule, we spent a lot of time talking to industry and consumers and analyzing costs and benefits. That’s a lot of context, and that means a long preamble.

If that paragraph looks familiar, it should. We wrote it when we proposed the rule. We just copied and pasted it here. (Hey, it’s still accurate, except 43 years is now 44.) This time, the preamble contains even more information. We have a responsibility to acknowledge and explain our reactions to the comments we received in the public comment period. Again, there were almost 3,000 of them. Some of them asked us to study something or to provide evidence or more explanation for things we had decided. As you’ll see in the table below, this accounts for the bulk of the increase.

Finally, based on these public comments, we modified some of the guidance and interpretations that accompany the rule. We had to explain what we were changing and why. That also made it longer, but it also clarifies a number of things that we heard weren’t clear in the proposal. We believe that in the long run, this clarity will make compliance easier for industry.

Here’s a quick breakdown of what’s in the document:

Content Pages
Proposed amendments to regulations
Proposed guidance regarding compliance with the amended regulations
Signature page

Okay, bottom-line this. What does the new rule do?

This rule is about improving the way consumers get loan information when they apply for and close on a mortgage. Most of the requirements are about two disclosure documents, the Loan Estimate and the Closing Disclosure. There are also some key provisions about timing. Yesterday’s post describes the basic requirements, and it details why the new disclosures improve the experience of getting a mortgage.

How long does industry have to comply with this?

The rule generally is effective for any loan applications that a lender receives on or after August 1, 2015. Some provisions become applicable right on August 1, 2015, because they apply to things that can happen before an application is received. For industry, that probably seems fast. For consumers, it may seem like a long time. Our goal was to give industry enough time to make system changes, devise new business practices, and train staff. Consumers will be better off if industry has the time and support it needs to understand and comply with the rule. To that end, in the next few months we’ll start an implementation support program for mortgage providers and servicers who will have to comply.

Can I hear from you as you release more information about the rule?

Yes! If you want to hear from us about the implementation support efforts, sign up here. [put an email signup form to the right] We’re also creating tools to help consumers interested in owning a home. Sign up on our Owning a Home page to be one of the first to know as we release them.