CFPB Finalizes “Know Before You Owe” Mortgage Forms


We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, November 20th, 2013

Have you ever been left scratching your head at a mortgage loan closing, wondering exactly what you were getting into, even after you have done your homework?

Today the Consumer Financial Protection Bureau (CFPB) issued a new rule requiring easier-to-use mortgage disclosure forms so that consumers can better navigate the mortgage lending process. The new “Know Before You Owe” disclosures are designed to make the mortgage borrowing process less worrisome and to give consumers more information and confidence in their choices, before signing on the dotted line.

The new rule is slated to go into effect on August 1, 2015.

Consumers Union is pleased to see the CFPB put into place this new rule requiring simplified disclosures.  The new disclosures will encourage responsible lending and borrowing by making it easier for consumers to understand and identify key features of a mortgage they are considering, including risky loan features, the short-term and long-term costs, and the monthly payments, including payment and interest, required by the loan.  If the consumer is considering an adjustable rate loan, the forms tell the consumer what the projected minimum and maximum payments would be over the life of the loan, an important consideration that is often difficult for consumers to determine without this key information.

The new disclosures are designed to make it easier for consumers to comparison shop among their loan options and lenders offering mortgage products.  Consumers also get more time to consider their choices before closing and circumstances are limited in which consumers can be required to pay more for settlement services than the amount stated on their Loan Estimate.

The CFPB has prepared a factsheet about the “Know Before You Owe” mortgage disclosure.  Here is a link to the full “Know Before You Owe” mortgage disclosure rule.

Ever nervous at a mortgage loan closing?  Tell us your story in the Comments section about how “Know Before You Owe” simplified disclosures could have helped you.


Leave a Reply

Your email address will not be published. Required fields are marked *