APRIL 10, 2015
Mortgage terms will be simpler for home buyers to read and understand come Aug. 1. Borrowers will receive one disclosure, the Loan Estimate, detailing the terms and projected closing costs shortly after application, and another, the Closing Disclosure, just before signing off.
The new forms, mandated by the Consumer Financial Protection Bureau, will likely seem to consumers a relatively minor, if welcome, change. But for the lending industry, and all the other parties involved with mortgage transactions, preparing for the switch is a massive undertaking.
The new forms are part of a nearly 1,900-page rule created by the bureau to fulfill its obligation under the Dodd-Frank Act to integrate and simplify the four different mortgage disclosures currently required under the Truth in Lending and Real Estate Settlement Procedures acts. Commonly referred to as the TILA-RESPA rule, it became final back in November 2013. With the Aug. 1 effective date looming, the lending industry is still scrambling to comply.