CFPB considers delay for “Know Before You Owe” mortgage rules
The Consumer Financial Protection Bureau is considering an amendment that would delay its “Know Before Your Owe” mortgage rules, due to kick in Aug. 1, by two months.
The agency wants the rules to take effect on Saturday, Oct. 3 to correct an administrative error that would have delayed the rules by at least two weeks had the effective date been Aug. 1.
CFPB’s “Know Before You Owe” rule finalized in January gives creditors more time to draft disclosure forms. Under the rules, creditors will have three days to provide a revised loan estimate once a consumer locks in a floating interest rate. Loan estimates are now due on the day the rate is locked.
The rule will also give creditors more leeway in revising estimates for construction loans. Because construction loans take longer to settle than other loans, CFPB said estimated charges often change. Under the new rule, there is a space on the loan estimate form where creditors can notify consumers that they could receive a revised estimate if the loan does not settle in 60 days.
In a news release, CFPB said it believes moving the effective date may benefit both industry and consumers with a smoother transition to the new rules.
“The Bureau further believes that scheduling the effective date on a Saturday may facilitate implementation by giving industry time over the weekend to launch new systems configurations and to test systems,” the agency said. “A Saturday launch is also consistent with existing industry plans tied to the original effective date of Saturday, August 1.”
The public has until July 7 to comment on the proposed delay.
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