Feds Want Your Feedback on Proposed Mortgage Forms

Federal regulators are asking for industry input on prototypes for a new, unified settlement disclosure form that will replace the separate HUD-1 Settlement Statement and Truth in Lending disclosure form currently in use.

The Consumer Financial Protection Bureau -- which has also been asking for feedback this year on a unified loan disclosure form that consumers will receive when they apply for a mortgage -- says it plans to test a number of different designs for a new settlement disclosure form over the next few months.

The bureau will accept industry and consumer feedback until Nov. 16 on its initial prototypes for a redesigned settlement disclosure form. Based on that feedback, the bureau will fine-tune the prototypes and seek additional comments.

Consumers currently get two disclosure forms whenever they apply for a mortgage, and two more at the closing table.

One loan disclosure form is aimed at satisfying Truth in Lending Act requirements (the "TILA" form), detailing loan terms like annual percentage rate (APR). The other form -- the good faith estimate, or GFE -- is required by the Real Estate Settlement Procedures Act (RESPA), and is intended to help borrowers evaluate their complete loan package, including closing costs like title insurance.

There's similar duplication at the closing table. Consumers get a TILA disclosure detailing the terms of their mortgage, and a HUD-1 Settlement Statement itemizing additional closing costs.

In passing the Dodd-Frank Wall Street Reform Act, Congress created the Consumer Financial Protection Bureau. One of the tasks lawmakers assigned the new bureau: create unified disclosure forms, for both loan applicants and homebuyers closing a deal, that meet TILA and RESPA requirements.

When the forms' designs have been finalized, consumers will receive a unified loan disclosure form each time they apply for a mortgage, and a unified settlement disclosure form when they purchase a home.

Give the Feds your feedback here.

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