CFPB Finalizes Updates to “Know Before You Owe” Mortgage Disclosure

The Consumer Financial Protection Bureau (CFPB) recently finalized updates to its “Know Before You Owe” mortgage disclosure rule which formalized the rule and helped with implementation of the rule by the mortgage industry.

CFPB Director Richard Cordray said the rules help ensure consumers have the easy-to-understand information they need before making a decision and the updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process for lenders and consumers.

The Know Before You Owe mortgage disclosure rule took effect Oct. 3, 2015. The CFPB’s rule created new, streamlined forms that consumers receive when applying for and closing on a mortgage.

The finalized updates published on the CFPB website include:

Tolerances for the total of payments: The Know Before You Owe mortgage disclosure rule changed the total of payments calculation so that it did not make specific use of the finance charge. The CFPB is now finalizing updates to include tolerance provisions for the total of payments that parallel the tolerances for the finance charge and disclosures affected by the finance charge.

Housing assistance lending: Through the update, more housing assistance loans will qualify for the partial exemption, which should encourage these loans.

Cooperatives: The Bureau is finalizing updates to extend the rule’s coverage to include all cooperative units. Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the CFPB is simplifying compliance and ensuring that more consumers benefit from the rule.

Privacy and sharing of information: The Know Before You Owe mortgage disclosure rule requires creditors to provide certain mortgage disclosures to the consumer. The CFPB is finalizing additional wording to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.

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