New disclosures streamline the process
The Dodd-Frank Wall Street Reform and Consumer Protection Act required the CFPB to combine certain RESPA and Truth-in-Lending disclosures. So, that’s what we’ve done. Four documents have been turned into two. Now, the pages your clients see at the time of application and at closing mirror each other, so it’s easier to compare and notice changes.
Four disclosures consolidated into two
The Loan Estimate
The Loan Estimate combines and replaces the Good Faith Estimate and the initial Truth-in-Lending (TIL) statement. The form highlights the most important elements of the transaction and allows for easy comparisons among competing lenders.
Find out more with our Loan Estimate Explainer
The Closing Disclosure
The Closing Disclosure combines and replaces the HUD-1 Settlement Statement and the final Truth-in-Lending (TIL) statement. The form mirrors the information provided on the Loan Estimate.
For a closer look, visit our Closing Disclosure Explainer
How the documents work together
The new documents put the most relevant information in the most prominent place.
1. Estimated total monthly payment
The Estimated Total Monthly Payment appears on the first page of both the Loan Estimate and the Closing Disclosure.
Your clients see the estimated total monthly payment as soon as they receive the Loan Estimate. This provides a reference point. You can also help your clients understand the impact of fees not included in the estimated total monthly payment, such as condominium, homeowner’s association, maintenance, and any other property-related fees your client will be expected to pay.
The lender cannot ask your clients to pay for an application, appraisal, or similar fee until after they have had the opportunity to review the Loan Estimate and have indicated that they would like to move forward with their application. The need for borrowers to indicate their intent to proceed before fees are allowed is just one change. Learn more about what has and has not changed about the mortgage process.
If the estimated total monthly payment is different on the initial Loan Estimate than it is on a revised Loan Estimate or on the Closing Disclosure, your clients can easily spot the difference and make sure they understand and agree.
2. Estimated cash to close
The Estimated Closing Costs and Estimated Cash to Close also appear on the first page of the Loan Estimate and Closing Disclosure.
Your clients see how much money they are expected to pay in closing costs and how much they are expected to bring to the closing table as soon as they receive a Loan Estimate. The estimated cash to close includes both the closing costs as well as the down payment.
If the amounts change on any revised Loan Estimates or Closing Disclosures, your clients have the time to ask why, make decisions, and respond.
Talk to your industry partners
Your mortgage lending, title, and escrow partners have been focused on building their systems, processes, and training to comply with the new rules as they become effective. So, these partners are valuable resources for you as well.