Changes to 'Know Before You Owe' mortgage rules finalized

The Consumer Financial Protection Bureau (CFPB) has finalized some changes to its “Know Before You Owe” mortgage rules. 

The new rule, gives creditors more time to draft disclosure forms. Now, creditors have three days to provide a revised loan estimate once a consumer locks in a floating interest rate. Previously, the loan estimates were due on the day the rate was locked.

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Another change will give creditors more leeway in revising estimates for construction loans. Because construction loans take longer to settle than other loans, the CFPB said estimated charges often change. Under the new rule, there is a space on the loan estimate form where creditors can notify consumers they could receive a revised estimate if the loan does not settle in 60 days. 

“The new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” CFPB Director Richard Cordray said in a news release on Tuesday.

“Today’s minor changes will make it easier for creditors to comply with the disclosure rules while maintaining these important new consumer protections.”

But some creditors want the CFPB to provide more guidance on its regulations. 

The National Association of Federal Credit Union (NAFCU) wants the bureau to issue creditors written guidance on how to comply with the Truth in Lending Act and the Real Estate Settlement Procedures Act. 

“We believe reliable written guidance is essential for credit unions to operate on a level playing field in implementing the regulation, and will help avoid unnecessary confusion and discrepancies in implementation down the road,” NAFCU Director of Regulatory Affairs Alicia Nealon said. 

Now the CFPB provides oral guidance on its regulations through its hotline and webinars.