Be an industry advocate: Take your red pen to the new mortgage cost estimate forms

Compared with the old mortgage disclosure forms, do you think these new forms will be easier for borrowers to understand?

No (70%, 23 Votes)
Yes (30%, 10 Votes)

Total Voters: 33

The Consumer Financial Protection Bureau (CFPB) has unveiled its new Loan Estimate and Closing Disclosure forms for home loans.

These new forms were created to be uniform, clutter-free and user-friendly replacements for the current Good Faith Estimate (GFE), Truth in Lending Disclosure and HUD-1 forms provided to borrowers during the loan origination process.

These new forms are now available for review on the CFPB website. The CFPB is still soliciting comments for finalizing the forms and their use.

Deadlines for comments regarding the following are due by September 7, 2012:

new methods for calculating the Annual Percentage Rate (APR);
new methods for calculating lender finance charges; and
the effective date for certain disclosures.

The deadline for other comments regarding the new forms and their use is November 6, 2012. Comments may be submitted to the CFPB via its website.

first tuesday take

No more fine print!

Those who oppose the format of the new forms argue that crucial information is omitted from the Loan Estimate and Closing Disclosure.

True, some information has been edited from the forms, but the CFPB has stayed true to its goal of increasing transparency in financial transactions and educating consumers. They did this by rewording confusing content or eliminating noncritical information from the loan forms.

Forms that are engineered simple protect buyers by clearing out potentially confusing, meaningless or misleading financial statements and documents.

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There is little room on the sleeker Loan Estimate and Closing Disclosure forms for lender sleight of hand.

The first page of the Loan Estimate will be especially conducive to shopping around for home loans. The “bottom line” of closing costs, interest rate, and monthly principal and interest payments are printed in large font on this page. All borrowers have to do is hold the front page of two lender Loan Estimates side-by-side to judge which offers better terms.