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Update: Save the date, Boston!


Join us for a field hearing in Boston on Know Before You Owe: Mortgages. The hearing will take place on Wednesday, November 20 at 11 a.m. EST at the following location:

Back Bay Grand
Back Bay Events Center
180 Berkeley Street
Boston, MA 02116

The event will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

This event is open to the public and requires an RSVP.

Email with:

  • Your full name
  • Your organizational affiliation (if any)

Let us know if you need a special accommodation to participate.

See you there!

Save the date, Boston!


Join us for a field hearing in Boston on Know Before You Owe: Mortgages. The hearing will take place on Wednesday, November 20 at 11 a.m. EST. More information about the event will follow.

The event will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

This event is open to the public and requires an RSVP.

Email with:

  • Your full name
  • Your organizational affiliation (if any)

Let us know if you need a special accommodation to participate.

See you there!

More than 500 colleges agree to adopt financial aid shopping sheet


Cross posted from the Department of Education. We were proud to work with the Department of Education on this Know Before You Owe Project.

By Arne Duncan

I am pleased to announce that more than 500 colleges and universities (.xls), enrolling more than 2.5 million undergraduate students (thirteen percent of all undergrads), have committed to adopting the Financial Aid Shopping Sheet during the 2013-2014 school year.

The adoption of the Financial Aid Shopping Sheet is a big win for students already attending these institutions and those who are considering enrolling. The Shopping Sheet provides a standardized award letter allowing students to easily compare financial aid packages and make informed decisions on where to attend college. Students and their families now have a clear, concise way to see the cost of a particular school.

The Obama administration introduced the Shopping Sheet in July, and to coincide with the release, I sent a letter to college and university presidents asking them to adopt the Shopping Sheet as part of their financial aid awards starting in the 2013-14 school year.

I applaud the institutions that have agreed to adopt the Shopping Sheet, and hope more colleges and universities follow their example in offering students and families an easy-to-read award letter that delivers the bottom line on college costs.

Learn more about the Shopping Sheet here, and, if you’re an institution interested in adopting the Shopping Sheet for your students, or have questions about adopting it, please contact

Arne Duncan is Secretary of Education.

Explainer: Why did it take 1,099 pages to propose a three-page mortgage disclosure?


Dear CFPB,

Recently, I saw your notice of proposed rulemaking to combine and simplify existing mortgage disclosures. It’s 1,099 pages long! Why does it take so many pages to create something that’s supposed to be easy to use and understand?

Interested in your regulations

Dear Interested,

This is a great question, one you’re not alone in asking — 1,099 is a lot of pages, as those of us who were involved in writing them can attest.

Let’s start with some background. Currently, two federal laws – the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) – mandate that consumers receive disclosures of certain information about mortgage loans. The Dodd-Frank Act required the CFPB to propose a rule to combine the TILA and RESPA disclosures.

If you want to see the new combined disclosures, combine and simplify existing mortgage disclosures check them out here. If you want to see what the proposal means for you, we’ve provided summaries, one on what it would mean for consumers and one with more technical detail.

You said “propose a rule to combine the disclosures” instead of just “propose combined disclosures.” Why?
It’s an important distinction. The rule explains how we would expect industry to use the disclosures: when to issue them, how they apply to different loans, what various terms mean, etc.

And that proposed rule is 1,099 pages?
Actually, no. We are not proposing 1,099 pages of new regulations. That page count is for the notice of the proposed rule, not the rule. Like notices of proposed rulemaking issued by other agencies (particularly the Federal Reserve Board), our proposal consists of three basic parts: (1) the preamble explaining the proposal; (2) the text of the proposed regulations; and (3) guidance on how to comply with those regulations.

In terms of pages, the new regulations are only a small part. Most of the pages explain what we are doing and why we are doing it. As required by law, we analyze the costs and benefits of the proposal for consumers and industry. We also provide thorough guidance on how to comply including samples of completed forms, which the industry requested during our outreach and Small Business Review Panel process. Because of the variability of mortgage loan and real estate transactions, industry wanted specific guidance for many different potential scenarios. This added to the page count.

Here’s how the notice breaks down:

Content Pages
  • Directions on how to submit comments
  • Summary of the proposed rule
  • Overview of the mortgage market and the mortgage shopping process
  • Summary of 43 years of TILA and RESPA mortgage disclosure regulation
  • Summary of the Dodd-Frank Act provisions requiring the Bureau to combine the TILA and RESPA mortgage disclosures and related Dodd-Frank Act mortgage rulemakings
  • Summary of the Bureau’s outreach, disclosure testing, and Small Business Review Panel
  • Statement of the Bureau’s legal authority
  • Detailed explanations of the reasons for each aspect of the proposed rule and requests for comment
  • Analyses of the costs and benefits of the proposed rule for consumers and industry, as required by the Dodd-Frank Act, the Regulatory Flexibility Act (as amended by the Small Business Regulatory Enforcement Fairness Act), and the Paperwork Reduction Act
Proposed amendments to regulations
  • New rules
  • Technical and conforming amendments to existing rules
Proposed guidance regarding compliance with the amended regulations
Signature page

The preamble is long.
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.

Why bother with all this context?
First, some of it is required by law. Second, we believe that part of our commitment to open government is providing more rather than less information about our work. Finally, we want your comments to help us understand the market better, and providing context can lead to more informative comments. Explaining what we considered in writing the proposal makes it easier to craft specific responses or to draw our attention to something you think we’ve missed. Comments that provide new insight or information can be the ones that have the greatest impact on what we do next.

That leaves 415 pages. Only part of that is new rules, though. What else is left?
The technical and conforming amendments make sure the new rules don’t conflict with existing rules, that they make the right cross-references, etc. This actually accounts for more than half of the proposed regulatory language.

The proposed guidance explains what certain regulatory language means in context. For example, the phrase “within three business days” appears a lot in this notice, as in: a creditor must deliver the loan estimate disclosure “within three business days” of application. But what counts as a business day? If a bank is closed the Friday before an Independence Day that falls on Saturday, does that Friday count as a business day? (Answer for purposes of delivery of this disclosure: yes.) Providing guidance that clarifies issues like these can save time, energy, and costs for both industry and regulators.

And the signature gets its own page?
Yes. We don’t expect a lot of comments on that page.

So where can I comment on this notice of proposed rulemaking?
First, we hope you’ll take a look at the Know Before You Owe project that helped us develop the proposed disclosures. Then, review the rule and submit your comments at

Know Before You Owe: Introducing our proposed mortgage disclosure forms


This is the third post in a series on the Know Before You Owe project for simplifying mortgage disclosures. Last week, we explored the origins of the project and the process that brought us to this point. Today, we’re explaining the proposed rule we’re issuing to make mortgage disclosures more effective and easier to use.

For the majority of Americans, buying a home means taking out a loan. A mortgage loan is the biggest financial commitment most of them will make in their lifetimes. With something so important, you ought to be able to get up-front, easy-to-understand information that lets you compare different loan offers and find the one that’s best for you.

The first page of the proposed three-page loan estimate

The proposed loan estimate, which combines the original Truth in Lending disclosure and the Good Faith Estimate into a single three-page disclosure.

That idea was the starting point for the Know Before You Owe mortgage disclosure project. The Dodd-Frank Act requires us to combine the Truth in Lending and Real Estate Settlement Procedures Act disclosures, and we began Know Before You Owe to make sure the people who would use the new forms were part of the process of creating them.

Today, we’re presenting the results. After more than a year of research, testing, writing, and review, we’re submitting a proposed rule to the Federal Register to create new, easier-to-use mortgage disclosures.

Take a closer look and learn more about it.

There is more to the proposal than just the forms. Today, rules known as “Regulation X” and “Regulation Z” tell industry how to fill out the forms. We are proposing new rules in Regulation Z to tell industry how to fill out the new forms. We are also proposing commentary that interprets the rules to help industry understand how to comply. To help you see how the rules and the commentary interact with each other and the forms, we are showing you the applicable rules and commentary for each section of the first page of the Loan Estimate.

We’re doing this to save you the trouble of flipping pages to find the right rule for filling out the form, and then flipping more pages to find the right comment to help you understand that rule. Instead of you hunting for the rules and commentary, they will come to you.

We think this is a helpful way to present the proposed rules and commentary to busy industry stakeholders. If this is useful, we will explore doing it for the rest of the rule. See for yourself.

More about the proposed rule

The new disclosure – Compare our proposed disclosures to the existing ones.

How we did it – Review a timeline of the project, from the Dodd-Frank Act to today.

The proposed rule – See the full proposed rule, including a version of the first page of the Loan Estimate annotated with the relevant sections of the rule and commentary.

More resources – Proposal summaries, reports on what we heard in testing and the small business review panel, and more.

The proposed rule and forms would have benefits for both consumers and industry:

  • Simpler than the old forms. Lenders can explain the terms more easily using fewer forms. Consumers, meanwhile, can understand and compare different mortgages more effectively, and compare their estimated and final terms and costs more easily, helping them make the right decisions for themselves and their families.
  • Highlight information consumers need. Interest rates, monthly payments, the loan amount, and closing costs are all right there on the first page. Also, the first page explains how the interest rates, payments, and loan amount might change over the life of the loan, including the highest they can go. The forms also offer more information about taxes, insurance, and other property costs so consumers can better understand the total cost.
  • Easier to look out for risks. The forms provide clear warnings about features some consumers may want to avoid, such as adjustable interest rates and payments, prepayment penalties, and loan balances that increase (negative amortization). The proposed rule also contains provisions to make estimates more reliable. And because the proposed rule requires lenders to keep electronic copies of the forms they give to consumers, industry and regulators will be able to address compliance questions more easily.
  • More time to consider choices. The lender or broker must give the estimate within three business days of applying, and they must receive the closing disclosure at least three business days before closing.

The rule will be published in the Federal Register soon, and when it is, we’ll update this blog post to let you know how to comment.

In the meantime, please, check out the new forms and the process that brought us here. We’ve got a lot more for you to explore: a side-by-side comparison of the new forms and the old ones, a visual timeline of how we got here, summaries for consumers and for industry, and reports on what we learned.

Thank you for all your hard work. We couldn’t have done this without you.

Know Before You Owe: How we learned to build a better mortgage disclosure


This is the post second in a series. Yesterday, we looked at the origins of the Know Before You Owe project for simplifying mortgages. Today, we look back at how the project unfolded. Very soon, we’ll issue a new proposed rule to make mortgage disclosure more effective and easier to use.

In our last post, we mentioned that one question that we asked people to consider was: “What would you like to see improved on the form? Is there some way to make things a little bit clearer?” Soon, we’ll propose the rule that implements new mortgage disclosure forms, and you’ll be able to judge whether they’re better and clearer than the existing forms. (To get a message when we do, sign up to the right.)

For today, we want to take a look back at the work we did with your input to get to this point. This post is a little longer than most of what we write on this blog, but this partnership with the public has produced results that deserve a lot of recognition.

Know Before You Owe wasn’t actually the first step in the process of combining mortgage disclosures. Technically, the first step was the signing of the Dodd-Frank Act on July 21, 2010. The Act includes provisions requiring us to combine the Truth in Lending and Real Estate Settlement Procedures Act mortgage disclosures.

In November 2010, we joined the Treasury Department to host a symposium on mortgage disclosure with consumer advocates, government officials, psychologists, marketers, and representatives from the mortgage lending industry. The day was a jumping-off point for our efforts, a way to share and collect ideas for what kind of changes in disclosure would help consumers.

Before we could test forms, we needed forms to test. We needed something more specific than “What should we change about the current forms?” to give our testers some direction on what we were trying to achieve. So, starting with a blank piece of paper on a wall, we asked ourselves two questions: What information about the mortgage is useful to consumers? What information is useful to the industry? By using these questions as the framework for the forms’ legal requirements, we came away with a series of drafts that let us begin testing.

The testing process took us to cities across the country: Baltimore, Los Angeles, Albuquerque, Springfield (MA), and more. In each place, we tested new prototypes of the combined initial disclosure with different kinds of mortgages, different terms, and different comparisons of loans. For a few days in each city, we asked consumers, lenders, and mortgage brokers questions about our prototype forms. This exposed issues with the designs we were testing and made sure our design process was always user-centered.

As we were testing, we were also wrestling with another issue: how the new disclosure consumers receive after they apply for a loan would work with the disclosure consumers receive before they close on the mortgage. These forms need to work together. Consumers should be able to understand whether the final terms and costs of their loan have changed from the initial estimates.

To address this, after six months of testing the initial disclosure, we began testing a new combined closing disclosure. This form combined the HUD-1 Settlement Statement with the final Truth in Lending disclosure. We tested versions of this form in cities across the country like Des Moines, Birmingham, and Austin.

The online supplement to round one of the Know Before You Owe mortgage disclosure project compared two different combined loan estimate formats

Screen shot of the online supplement to round one of the Know Before You Owe mortgage disclosure project

At the same time we began in-person testing of the initial disclosure in Baltimore in May 2011, we also posted the first two prototypes for comparison here on We created an online feedback tool that let people choose between two different prototypes, and then click on the parts of the forms they thought worked well or didn’t, found confusing or interesting, had suggestions for. Basically, we wanted any reaction that could help us learn and improve. They could then submit a comment telling us why they clicked on a particular part of the form. We also asked if there was anything missing.

The feedback was overwhelming. Over seven rounds of this online feedback tool, we received more than 27,000 user comments, split almost evenly between consumers and industry. And we used this feedback in a variety of ways. For example:

  • We aggregated the results into heat maps that let us get a sense for which parts of the forms people paid attention to most. Each prototype generated a different click pattern, so we could analyze them against each other to understand how people’s reactions changed.
  • We aggregated and analyzed the comments submitted along with clicks. Seeing what drew people’s attention is one thing. Learning the specifics of what they were concerned about or liked gave us more specific sentiments. These sentiments guided us for future versions of the prototypes and offered ideas for how to solve problem areas elsewhere in the form.
  • We used the online results to supplement the in-person testing. In-person sessions functioned more like real-world mortgage applications than the online review did. Testing participants were asked more specific questions, like which of two loans they would choose or, for industry, how they would explain certain sections to consumers. Seeing how people would actually use a form suggested different things from seeing what they thought of it theoretically.

As we began focusing on writing the rule to implement new disclosure requirements earlier this year, we also started the small business review process. Mortgage disclosure is important to a variety of small businesses, such as lenders, mortgage brokers, and settlement agents. We asked for their feedback on the potential impacts of complying with various proposals we were considering.

When we release the proposed rule and forms, we’ll also release reports on both the testing that led us here and the small business review that gave us feedback on particular proposals. The reports will offer some context for the heart of the work: the new proposed rule and the forms. Make sure you hear from us when it’s available.