The head of the Consumer Financial Protection Bureau on Wednesday previewed the next set of mortgage-related regulations coming down the pike, putting the financial industry on notice that compliance is expected by next summer.
The forthcoming regulations center on disclosure forms mortgage lenders are required to give borrowers during the application process and again during the closing stage of the agreement.
At the same time, the rule will simplify the forms, presenting the basic terms of the loan in plain language, he said.
“Consumers will not be bamboozled by tricky tactics,” Cordray said at a conference hosted by the National Association of Federal Credit Unions. “They will be able to see and understand loan offers for what they really are.”
Industry groups have long been aware of the impending rule, a requirement of the Dodd-Frank financial reform law of 2010.
Cordray said some lenders are already preparing for compliance, which he said would require “significant changes to business operations and technology platforms and could require lenders to enlist help from third-party service providers."
“While many mortgage institutions are already deep into the process of implementing these changes, we want to make sure that everyone understands the need to be focusing on August 2015 right now,” he said.
The initiative follows a slate of new mortgage regulations that took effect in January. Together, the rules are meant to prohibit risky lending practices seen as leading to the foreclosure crisis of the late 2000s, and subsequent global recession.
This story was updated at 8:11 p.m.