Tag Archives: final rule

OnlineEd’s CFPB Preparedness Article Published in Scotsman Guide

December 5, 2013 – OnlineEd was recently published in the December Scotsman Guide’s Residential Edition. Click the link below to read or download the complete article.

Our article outlines the need for mortgage businesses, both large and small, to prepare for CFPB examinations. We break down the CFPB examination guide’s criteria for education and training, and outline some best practices for staying ahead of the curve and being proactive with compliance. The article stresses the importance of having a suitable training program in place in accordance with written policies.

For the online version of Scotsman Guide’s December Residential Magazine, visit their website by clicking here. Some of this month’s topics include helpful tips on qualified mortgages (QM) for independent mortgage brokers, paperless cloud-based loan management, and tips on how to remain profitable in the face of tumbling refinances.

Make sure that you are not operating under the impression that the CFPB isn’t going to be concerned with your small mortgage business. For more information on preparing a training program and policies for your mortgage business, call OnlineEd at (866) 519-9597.

New Mortgage Disclosure Final Rule Released

November 22, 2013 – At a field hearing in Boston on Wednesday, November 20, 2013, Richard Cordray of the CFPB took the opportunity to unveil the new “Know Before You Owe” forms, which will replace their better known “good-faith estimate” predecessors.  The final rule issued on Wednesday will require lenders to replace the oft-confusing good faith estimate with the easier-to-use form by August of 2015.
 

Loan Estimate Preview

Follow the links below for an early look at sample versions of these forms.

Loan Estimate | Closing Disclosure


 

The 3-page Loan Estimate replaces both the early Truth in Lending statement and the current Good Faith Estimate, while the 5-page Closing Disclosure replaces the final Truth in Lending statement and the HUD-1 settlement statement.
 
The CFPB explains each form:

The loan estimate: This form will be provided to consumers within three business days after they submit a loan application. It replaces the early Truth in Lending statement and Good Faith Estimate and provides a summary of the key loan terms and estimated loan and closing costs. Consumers can use this form to compare the costs and features of different loans.

The closing disclosure: Consumers will get this form three business days before closing on a loan. It replaces the final Truth in Lending statement and the HUD-1 settlement statement and provides a detailed accounting of the transaction

Spanish language versions: The CFPB is also including Spanish-language versions of the forms in the final rule, which it tested with Spanish-speaking consumers.  These Spanish-language versions will provide important benefits to industry in communication with Spanish-speaking consumers.

Compliance actually gets a little simpler this time around, since the industry will no longer have to administer compliance with two different sets of regulatory requirements.  Paperwork is cut in half, meaning long-term savings and less redundant work for the lender.

The two forms are nearly identical in layout, making it much easier to compare information in the estimate and the closing disclosure.  This will make shopping for loans a much simpler process for the consumer, showing up to a 42 percent improvement in comparing loans.  An extensive study showed statistical improvement of 29 percent in participants who used the new forms being better prepared to ask questions about a sample loan.  Specifically, consumers were better able to identify:

  • Risk Factors like prepayment penalties, balloon payments, or an increase in the loan balance in a negative amortization loan.
  • Short-term and long-term costs .
  • Monthly payments

While many of the CFPB’s final rules have been met with a decidedly mixed reception, this looks to be an improvement for both mortgage lenders and consumers.  Keep checking back from more compliance news from OnlineEd.