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CFPB Finalizes Minor Changes to “Know Before You Owe” Mortgage Rules

Tweaks Address Mortgage Disclosures After Locking Interest Rates and Information on Construction Loans

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today finalized two minor modifications to the “Know Before You Owe” mortgage disclosure rules. The changes finalized today, which were proposed in October 2014, address when consumers will receive updated disclosures after locking in an interest rate, and how consumers receive information regarding certain construction loans.

“The new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” said CFPB Director Richard Cordray. “Today’s minor changes will make it easier for creditors to comply with the disclosure rules while maintaining these important new consumer protections.”

For more than 30 years, federal law has generally required that mortgage lenders deliver two different, overlapping disclosures to consumers within three business days after receiving a mortgage application. At the closing stage, federal law again generally requires two forms. All of these forms contain duplicative and sometimes confusing information. The Dodd-Frank Wall Street Reform and Consumer Protection Act recognized the need to simplify and streamline this information for consumers and transferred responsibility for the forms to the CFPB. In 2013, the CFPB introduced new mortgage disclosure forms that will replace the existing federal forms and help consumers understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.

Under the rule finalized today, creditors are required to provide a revised Loan Estimate within three business days after a consumer locks in a floating interest rate. The original rule required creditors to provide the revised Loan Estimate on the date the rate is locked. After hearing feedback from stakeholders, the Bureau determined that the short turnaround could potentially pose challenges for creditors that currently allow consumers to lock interest rates late in the day or after business hours. That could result in creditors only allowing consumers to lock interest rates during business hours or even early in the day. Allowing three business days for the new Loan Estimate will give creditors enough time to provide new disclosures without having to reduce flexibility that consumers may have today in locking their rates.

The second change being finalized today is a minor addition on the Loan Estimate form for loans that involve new home construction. These construction loans often take longer to settle than other loans, and the estimated charges can change. Today’s change creates a space on the Loan Estimate form where creditors could include language informing consumers that they may receive a revised Loan Estimate for a construction loan that is expected to take more than 60 days to settle.

The “Know Before You Owe” mortgage disclosure rule, including the changes finalized today, is effective August 1, 2015. The CFPB does not anticipate that today’s minor modifications will affect the industry’s ability to come into compliance with the rules within the 20 month implementation period.

The CFPB has online implementation resources available, including compliance guides, sample Loan Estimate and Closing Disclosure forms, and a calendar showing timing requirements based on a sample real estate transaction.

The rule will be effective on August 1, 2015, and is available at:

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit