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Mortgage disclosures are getting better, thanks to you.

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On July 21st, the Consumer Financial Protection Bureau opened its doors for business. That means that we have started taking your credit card complaints, and initiated the supervision process for large banks and their affiliates.

But our work didn’t start last week. In May, we launched Know Before You Owe, a project that combines and re-designs the disclosure forms that assist consumers in understanding mortgage products they’ve applied for, before signing on the dotted line. We put our draft disclosure forms online and asked for public input…and we got it. Since May, we’ve received more than 18,000 comments on different versions of our draft disclosure forms.

In Round 1, you helped us compare front-page designs for a single, simplified disclosure form. In Round 2, we looked for input on the second page of our form. Next week, we’ll be posting revised forms for comment. Before we do, we wanted to share what we learned from your comments, and how they affected what you’ll see when we start Round 3.

  • Clarifying “Cautions.” Many people found that simply stating “Cautions?” with the “Yes/No” answers was confusing and did not effectively communicate the intended message. Accordingly, “Cautions?” will be replaced with different language on the front page in Round 3 and we’ll see if that is more effective.
  • Telling you more vs. keeping it simple. Commenters were divided over the benefits of greater itemization of fees versus a simpler, more concise format on the second page. In Round 3, we will continue to determine the appropriate level of detail of fee disclosures for consumers, fixing some of the problems identified from the feedback and testing.
  • Important dates are, well, important. We heard from many that “Important Dates” should be moved to the front page, near “Date Issued.” In this round, we are going to see if that works better.
  • Setting “Points” aside. We will test putting “Points” on its own subject line for better clarity, as many recommended.

As you can see, we count on your feedback to improve the forms that customers and lenders will use every day. Sign up now, and we’ll e-mail you when it’s time to weigh in again.

  • Radkins2516

    Thanks CFPB for doing such a good job of costing the taxpayers more money and the lenders mor confusion and compliance burden. We appreciate it!

    • Ryan

      I’m in this for saving trees.  That and saving my eyes from straining to read however many pages of small print.  Oh and it saves me time I don’t have to read it… and the awkward look you get when you actually DO want to read it before you sign…  You know what?  I think what the CFPB is doing is a simple yet great thing – tax dollars that shouldn’t have been needed if the ALL POWERFUL free market would have fixed this itself… I’m sure it would have gotten there eventually *tongue in cheek*.

  • D467

    Radkins2516, how is this confusing lenders? The whole point is to clarify statements to consumers that  the lenders made confusing. The fine print in sub-prime lending lead to a housing crisis. The CFPB costs less than 1% of the amount banks generate just from late fees and overdraft fees. The incredibly small amount of tax dollars given to this agency is  nothing compared to the amount of money they’ll save Americans from misleading fine print and that affects everybody. If people lose their job or their house, they’re spending less money at the stores, then the stores lay off people, because they’re getting less business. 

    • Realist

      I will agree with you when you are saying that they are trying to make disclosures easier to understand, but I will disagree with who caused the current disclosures from being impossible to understand.  Most fine print is required disclosure language. It’s required to be in that format.  That said I will agree that they are trying to make it easier to understand, which they should.  Hopefully everyone wins, because the only ones who wanted fifty pages of legalese was the regulators.  Do you really think a banker designed the current uniform GFE/TIL or HUD docs?  They are a nightmare for us to have to try to explain to customers.  So don’t put the blame of horrible disclosure documents on banks, put them on the regulators.  They are the ones who designed what we use now.  Lastly I will state that I do really appreciate the effort that the CFPB is putting towards these documents.  I hope we truly end up with a document that the bank and more importantly the customer can understand.  You shouldn’t have to sit through a weeklong training course to be able to complete a GFE.

  • Scober13

    Just do everyone a favor and do away with “APR” disclosure for mortgages. When going through the pre-approval process and lender search 6 months ago, I received documents from 3 different lenders with an “APR” that was anywhere from half of a percentage point to one and a half higher than my quoted interest rate. I questioned each lender and each told me the same thing; “the APR disclosed is much higher than the actual APR will be because we have to disclose a figure equal to or higher than the actual figure”. Two of the lenders said costs that I will likely not incur are included in the APR figure just to be sure there are no compliance issues. It seems the lenders are more concerned with compliance than giving consumers accurate information. After closely reviewing all three lenders estimates, I determined the lender that disclosed the highest APR was actually offering the same rate at less cost than the other two. Go figure!
    The sample estimates provided are a step in the right direction and what CFPB is doing is appreciated by consumers.

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