The Consumer Financial Protection Bureau is engaging in an exhaustive process of testing and refining a new mortgage disclosure and it is actively seeking industry input to make sure it is easier and less costly to use than the existing Good Faith Estimate and Truth in Lending Act disclosures.
Starting this week, CFPB will begin testing two prototypes of the new "Loan Estimate" disclosure by interviewing consumers, lenders and mortgage brokers.
By the end of September, CFPB wants to complete five rounds of evaluations and revisions as bureau officials work toward perfecting the two-page disclosure.
"With a clear simple form, consumers will be in a better position to answer two basic questions: can I afford this mortgage and can I get a better deal somewhere else," said Elizabeth Warren, who heads the Treasury Department's CFPB implementation team.
This team is supposed to get the CFPB up and running by July 21 when it will inherit the authority to merge the RESPA and TILA regulations to improve consumer disclosures and reduce regulatory burden on the industry.
Some industry officials seem to be impressed by the CFPB’s first effort, including the Mortgage Bankers Association.
"The CFPB staff has obviously put a lot of thought into the new forms and we look forward to participating in the review and revision process alongside consumers," said MBA president and chief executive David Stevens.
He noted, however, that the industry just implemented a new GFE regime 18 months ago at considerable expense. "We need to make sure that this new form is highly beneficial to consumers who will bear the implementation costs," Stevens said.
CFPB has posted the two Loan Estimate disclosures on their website so lenders and brokers can comment online.
A CFPB official said they want to identify any implementation issues as early as possible so they can adjust and redesign the disclosure.
