WASHINGTON (9/12/14)--With new mortgage form requirements going into effect in less than a year, and technology offering solutions to make loan paperwork simpler for consumers and lenders, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray took some time to address those issues this week.
"The Consumer Financial Protection Bureau has enjoyed a great relationship with credit unions. We see eye-to-eye on many things, most of all that we both aim to serve Americans who are not only your members but also the consumers we work so hard to protect," Cordray said, speaking at the National Association of Federal Credit Unions Congressional Caucus.
The bureau's new mortgage disclosure forms will take effect Aug. 1, 2015, and Cordray provided some details of the program.
The new rule is intended to ensure that homebuyers no longer receive overlapping forms from lenders and the government. Under the new rules, consumers will get a single form after applying for the loan, known as the loan estimate, and one form before finalizing the loan, known as the loan disclosure.
"These new forms will enable consumers more readily to spot crucial information that demands their focus, such as the interest rate, monthly payments and total closing costs, as well as any special risk factors that could lead to payment increases over time," Cordray said. "The underlying premise for both the loan estimate and the closing disclosure is that consumers will be better able to understand the mortgages they are buying and the costs they are paying."
Cordray added that, though the forms are not required until August 2015, lenders should already be working on the rule and preparing for the change. The bureau is working on a readiness guide for the regulations to be released in the coming months.
The CFPB has been hosting a series of webinars leading up to the implementation date, and the next one is scheduled for Oct. 1.
Cordray also provided a summary on the bureau's eClosing pilot program, which will include two credit unions, BECU, Tukwila, Wash., with $12.6 billion in assets, and Mountain America CU, West Jordan, Utah, with $3.8 billion in assets (News Now Aug. 22 and Sept. 4).
"This pilot will explore how the increased use of technology during the mortgage closing process could affect consumer understanding and engagement and save time and money for consumers, lenders, and other market participants," he said.
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